EU: Financial Assistance to Member States
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	Question

Lord Pearson of Rannoch: To ask Her Majesty's Government whether Article 122.2 of the Treaty on the Functioning of the European Union can be used to require them to provide financial assistance to another member state which is "threatened with severe difficulties caused by exceptional circumstances beyond its control".

Lord Myners: Any request for financial support in accordance with Article 122.2 would need to satisfy the specific criteria set out in the treaty and would be considered on its individual merits by the ECOFIN Council, where it would be voted on by qualified majority.

Lord Pearson of Rannoch: My Lords, I am grateful to the Minister for that reply. I hope that he will forgive me if I say that illegality under the treaties has never bothered the Eurocrats. Will he give a clear guarantee that the United Kingdom will not, willingly or unwillingly, contribute to any out bail-out of the member states, including the proposed European monetary fund? Will he also confirm whether any such initiative would require a treaty change or whether it could be done by majority voting?

Lord Myners: I do not propose to comment on market speculation about the possibility of a European monetary fund. This is being discussed by the eurozone nations, but the UK is not part of those discussions. However, Article 125 of the treaty is very clear in stating:
	"The Union shall not be liable for or assume the commitments of ... governments ... A Member State shall not be liable for or assume the commitments of governments ... of another Member State".

Lord Waddington: Does the Minister agree that it would be grossly unjust if Britain finished up having to pay for the follies not only of those who joined the monetary union but of those who urged Greece's membership by bending the rules? Will he give a guarantee that we will not finish up paying for these follies?

Lord Myners: I think that the House would join me in encouraging Greece in the actions that it is taking to make the necessary fiscal adjustments to ensure that it is in a position to sustain the credibility of its borrowing and, importantly, to comply with the European growth and stability pact.

Lord Dykes: Did the Minister notice the defection on Friday of Edward McMillan-Scott, who joined the Liberal Democrats, emphasising over the weekend that there is no difference between the Conservative Benches and UKIP on European matters? Does he agree that the treaty and the ECOFIN mechanism provide a number of interesting options to help countries-Greece has a tiny GNP-for the whole Union? Above all, is he not perturbed and disturbed that the noble Lord, Lord Pearson, has not dealt with the priority in his party, which is to make sure-

A noble Lord: Too long!

Lord Dykes: The Conservatives should listen just occasionally to these points. Should the noble Lord, Lord Pearson, not make sure that Nigel Farage apologises for his unseemly outburst recently and-

Noble Lords: Too long!

Lord Dykes: Was he not described by another MEP as a lout?

Lord Myners: It really is not necessary for me to comment on the statements made by Mr Farage or another member of UKIP in the European Parliament. I do not think that it made any of us feel very proud to be British to hear that sort of language being used in the European Chamber. We know that there are differences between UKIP and the Conservative Party on matters of Europe, but they are no wider than the differences within the Conservative Party. There will be plenty of opportunities in the remaining four and a half minutes for Members on the Conservative Benches to evidence their support for the European Union.

Lord Forsyth of Drumlean: My Lords, given that the Government are borrowing £1 in every £4 that they spend, would it not be better to take a leaf out of Greece's book rather than to give it advice?

Lord Myners: Rather than giving advice, I said that we were pleased to see the steps that Greece is taking. We have already set out clearly in the Fiscal Responsibility Bill the actions necessary to reduce government spending and the deficit as a percentage of PBR to a sustainable level by halving it in less than four years once economic recovery is established. We are committed to waiting until recovery is firmly established, rather than snuffing it out as the Tories would do by premature cutting of public expenditure at a time when the economy cannot bear that cost.

Lord Tebbit: My Lords-

Lord Stoddart of Swindon: My Lords-

Baroness Royall of Blaisdon: My Lords, I think that we should hear from the noble Lord in the corner.

Lord Stoddart of Swindon: I am sorry to cross the noble Lord, Lord Tebbit-we are great friends normally. Does the Minister recall that, when he answered a Written Question from me on this subject, the Answer was an unequivocal no? However, this afternoon he appears to be equivocating about whether we would be required to bail out Greece in any way. Does he agree that, if Greece had not joined the eurozone, it would have been able to tackle the financial problems in the same way as Britain has?

Lord Myners: My Lords, I do not think that I equivocated at all. I do not think that I in any way deviated from the Answer that I gave to my noble friend in reply to his Written Question. I am sure that a careful reading of Hansard would prove that to be the case. As far as a hypothetical question is concerned, I do not propose to answer it.

Lord Tebbit: My Lords-

Lord Anderson of Swansea: My Lords-

Baroness Royall of Blaisdon: My Lords, I think that we have had two from the Benches opposite and I do not think that we have had one from this side.

Lord Anderson of Swansea: My noble friend gave a challenge to the Conservative Party a few moments ago. A substantial part of the four and a half minutes has elapsed and no one from the Conservative Benches has risen to say anything positive about the European Union. Does my noble friend draw any conclusions from that?

Lord Myners: I would like to allow the full seven and a half minutes. I look forward to hearing from the noble Lord, Lord Tebbit.

Lord Tebbit: My Lords, is the noble Lord aware that I acquit him of equivocation? Can he confirm that in his earlier answers he made a statement that would cause us to believe that, should any costs fall on the British taxpayer in respect of the bail-out of Greece, he would forthwith resign?

Lord Myners: We are talking about European Union support and I have been very clear in my response about that; I have been very clear in my response about what the treaty says.

Domestic Violence
	 — 
	Question

Tabled by Lord Morris of Handsworth
	To ask Her Majesty's Government what progress they have made in tackling domestic violence; and how the United Kingdom compares with other countries in that respect.

Lord Dubs: My Lords, on behalf of my noble friend Lord Morris of Handsworth, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

Baroness Scotland of Asthal: My Lords, we continue to make significant progress in addressing domestic violence, including expansion of specialist domestic violence courts, multi-agency risk assessment conferences and independent domestic violence advisers. The British Crime Survey indicates a 64 per cent decrease in the number of incidents of domestic violence between 1997 and 2008-09. Domestic violence is a volume crime accounting for one in seven-14 per cent-of violent incidents in 2008-09. This represents a 9 percentage point decrease from 1997. Prosecution rates have nearly doubled since the introduction of specialist domestic violence courts, to an average of 72.5 per cent, and continue to rise. I am not aware of any other country achieving such significant outcomes.

Lord Dubs: My Lords, I am grateful to my noble and learned friend for her Answer and congratulate the Government on the enormous progress that they have made in this very difficult area. I put to her one specific and detailed point. Can she confirm that the new domestic violence protection notices, which I believe will be very helpful in this area, will be introduced quickly, at the very least on a pilot basis?

Baroness Scotland of Asthal: My Lords, efforts are being made to introduce these orders as quickly as possible. I assure my noble friend that every opportunity will be made to introduce them quickly.

Lord Thomas of Gresford: The Home Office statistical bulletin published last year showed that, in the 10 years from 1997 to 2008, 361 homicides were perpetrated by partners or ex-partners as opposed to 253 homicides that were perpetrated by a stranger. Clearly, domestic violence leads to homicide. Why is it that, as reported by the Hestia Fund's report last November, support from independent domestic violence advisers, to whom the noble and learned Baroness referred-a service introduced in 2005-is available to less than half the women in this country, given that it has proved to be successful where it has been used?

Baroness Scotland of Asthal: My Lords, we now have more than 700 domestic violence advisers. I tend to refer to them as "divas", because that is what they are-both male and female. They are being rolled out right across the country, on a stage by stage basis. The noble Lord is absolutely right: they make a real difference. Every pilot that we have had demonstrates that difference, which is why we are making sure that there will be independent domestic violence advisers in every corner of our country.

Lord Ashley of Stoke: Is my noble and learned friend aware that some time ago in the House of Commons a group of us got together and decided on a campaign on domestic violence? We had met some of the women concerned, who had been beaten and bruised and shattered and battered. We were appalled at this, so we started a campaign, with some limited success. Is my noble and learned friend aware that the present picture is very unclear? For example, how many people are subject to domestic violence? What provision do we make for them? Do policemen still comment on it as a perk of marriage? Could my noble and learned friend inform us on that?

Baroness Scotland of Asthal: My Lords, unfortunately, one in four women will be subjected to domestic violence at some stage in their lives, with 89 per cent of them subject to repeat victimisation-meaning that one to four additional assaults are on women. We have made a real difference to that figure; we have almost halved the repeat victimisation figures and have saved £7.5 billion in terms of pain, injury, loss and suffering. That is making a significant difference. We have the lowest level of domestic homicide rates at any time for the past 10 years.

Lord Elystan-Morgan: Does the noble and learned Baroness agree that it is both right and proper that the criminal courts should regard domestic violence as, if anything, more serious than other species of violence, while remembering at all times that all unlawful violence tends to undermine a civilised society?

Baroness Scotland of Asthal: My Lords, I certainly agree that domestic violence should be treated more seriously-noble Lords will know that I have appeared in the Court of Appeal myself in the past few weeks to make that point. The Court of Appeal has been very clear to endorse the sentencing guidelines provision, and in the case that I appeared in the court doubled the sentence and made it clear that domestic violence is wholly unacceptable and will not be tolerated.

Lord Skelmersdale: My Lords, I think that the noble and learned Baroness has told the House that reported domestic violence is the lowest in our history. Can she explain why, according to the Home Office statistical bulletin entitled Crime in England and Wales, it has flat-lined since 2005?

Baroness Scotland of Asthal: My Lords, it has not flat-lined. There has been a 64 per cent reduction in domestic violence since 1997, and the trajectory is downwards. I said that the domestic violence homicide rate is the lowest it has been in 10 years.

Baroness Gale: My Lords, does my noble and learned friend agree that many young girls and boys witness domestic violence on a weekly, if not daily, basis and could learn a pattern of inappropriate behaviour? What efforts are being made to ensure that young boys learn that this behaviour is totally unacceptable, and that young girls learn that they can say no and there is no need for them to accept this form of behaviour?

Baroness Scotland of Asthal: My Lords, my noble friend is right: about 750,000 children in our country will see domestic violence in any given year. In February, the Government launched a £2 million campaign to raise awareness in relation to teen dating and teen violence. This is specifically targeted to help our young people understand that domestic violence is unacceptable and they should not participate in it.

Personal Finance: Home Credit Market
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	Question

The Lord Bishop of Ripon and Leeds: To ask Her Majesty's Government what plans they have to cap charges made in the home credit market.

Lord Young of Norwood Green: My Lords, I acknowledge the right reverend Prelate's concern regarding home credit and his desire to protect vulnerable people. Evidence suggests that caps on charges could be detrimental to those on low incomes by risking a contraction in the supply of licensed credit, leading to an increase in the use of loan sharks. The OFT is reviewing the high-cost credit market, including caps on interest rates, and the Government will respond quickly when the results are published.

The Lord Bishop of Ripon and Leeds: My Lords, I am grateful for that Answer and for the promise of thought and action in the future, because a large number of people are driven into deep debt by the home credit market. What action will the Government take to make it easier for credit unions to make loans, as they are a far better way of helping those in debt than home credit can ever be?

Lord Young of Norwood Green: My Lords, I wholeheartedly agree with the right reverend Prelate about credit unions. We strongly support credit unions and we have taken steps to make them more accessible to vulnerable consumers, helping them to move away from high-cost credit. The growth fund has enabled credit unions and CDFIs to make over 230,000 loans worth £100 million to financially excluded people. We have also laid a legislative reform order which will put credit unions in a better position to grow and provide a wider range of services.

Lord Elton: My Lords, I was surprised to hear the Minister dismiss the idea of capping charges, which can be astronomic. Can he tell us what is the highest rate that a person in the clutches of these lenders can be charged? Also, can he give us the Government's definition of "usury"?

Lord Young of Norwood Green: I cannot say what the highest rate is, but it could be something like 500 per cent-they are huge figures. We have looked carefully at introducing interest-rate caps, and we recognise that vulnerable consumers sometimes have little option other than to use high-cost credit products. However, the case for a rate cap is not clear-cut, and is not supported by consumer bodies-even though I have some personal sympathy with the idea. Introducing a cap could lead to lenders withdrawing from the market, denying vulnerable consumers legitimate sources of credit and leaving them no option but to resort to illegal, unlicensed lenders, exposing them to much higher borrowing costs and potentially violent methods for obtaining repayment.

Lord Campbell-Savours: My Lords, how can a loan at a rate of 500 per cent be described as legitimate?

Lord Young of Norwood Green: My Lords, I do not think that I was describing it as legitimate. I was asked to give an estimate of the highest possible figures and I went on to say why we have not yet acted to introduce a rate cap. Research tells us that that would not particularly solve the problem. In countries such as France and Germany, where they have introduced rate caps, more borrowers than in the UK admitted that they or someone in their household had used an illegal lender.

Lord Newby: The Minister referred to violence being used by loan sharks at the bottom end of the market. Is he satisfied that trading standards officers and the police have the resources that they need to crack down on loan sharks where they are known to operate?

Lord Young of Norwood Green: My Lords, since 2004, the Government have committed £16.5 million to tackling illegal money lending. Initially, that covered two pilot areas-Glasgow and Birmingham-but was rolled out in 2007 to cover every region of England as well as Wales and Scotland. The Government will continue to fund an anti-loan-shark team in every region until March 2011.

Lord Elystan-Morgan: My Lords, is it not the case that district and circuit judges have a wide discretion to brand as unconscionable high rates of interest and indeed any other oppressive condition in such a contract? Is it not time that every opportunity should be made to exercise that discretion, which enables courts to clamp down considerably if they are so minded?

Lord Young of Norwood Green: I would not demur from the point made by the noble Lord.

Baroness Hollis of Heigham: Will my noble friend encourage our ministerial colleagues in the Department for Work and Pensions substantially to increase the loan facility of the social fund, which makes credit available to people on lowest incomes, including benefit incomes, at virtually nil rate and reasonable terms of repayment? That would surely be an appropriate way to drive out some of the completely hazardous and disgraceful rates-not just 500 per cent but 1,000 per cent at the lower end of the market.

Lord Young of Norwood Green: I agree with my noble friend. There has already been some increase in the social fund and we will continue to try to ensure that that provides an opportunity for people to ensure that they get loans at a reasonable rate, especially at the vulnerable end of the market.

Lord Clarke of Hampstead: My Lords, in the continuance of support for credit unions, do the Government have any initiatives to assist in their start-up in localities and communities? One of the most difficult periods is in the earliest months of a credit union. It would be a great help to the public-spirited people starting them up if the Government could show some initiative in helping them, perhaps with preferential council tax on the premises that they often have to take at expensive rates in high streets.

Lord Young of Norwood Green: I agree with my noble friend. We have taken some steps, as I said in Answer to the right reverend Prelate, to support credit unions. We have taken steps to make them more accessible to vulnerable consumers. As I said, the growth fund has enabled credit unions and CDFIs to make more than 230,000 loans worth £100 million to financially excluded people. We will do everything we can to assist the establishment of credit unions.

Earl Attlee: My Lords, what is the most extortionate example of a home credit agreement in the Minister's brief?

Lord Young of Norwood Green: I have already answered that, as best as I can. The figures available tell us that rates of interest are extortionate. I have suggested 500 per cent, some have suggested that they are even higher than that and they may be right. These are illegal activities and, with a range of measures, we are doing our best to stamp them out.

Lord Teverson: Is it not the point that even credit card companies, which are supposed to be respectable banks, are still charging extortionate rates in double digits-up to 20 per cent APR-when we have a base rate of only half a per cent? Is that not even more outrageous in the terms of financial services?

Lord Young of Norwood Green: It might be a high rate of interest, but I think if we could reduce it from 500 per cent to the rates the noble Lord suggested, that the people concerned might find that a considerable improvement.

Asylum Seekers: Support Payments
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	Question

Lord Avebury: To ask Her Majesty's Government whether they will make a statement on the reductions in support payments to asylum seekers while they are awaiting a decision on their application.

Lord West of Spithead: My Lords, on 5 October 2009, we removed the distinction between rates of asylum support provided to single adults aged 18 to 24 and those aged 25 and over. The new unified rate was based on the lower rate provided to 18 to 24 year-olds, uplifted by 5.2 per cent. The rates paid to children and couples were also increased by 5.2 per cent. We continue to provide the over-25 rate to those who were in receipt of it prior to 5 October 2009, so no individual saw a reduction in their rate of support.

Lord Avebury: Is it still the Government's policy to provide for the essential living needs of asylum seekers awaiting their decisions? Can the Government give the calculation on which the reduction from £42 to £35 for an adult over 25 was based? Would the noble Lord agree that following the consultation on asylum support, the unfettered discretion of the Secretary of State to decide these amounts should be replaced by a process of scrutiny by Parliament to make sure that they are adequate to meet essential living needs?

Lord West of Spithead: My Lords, the reasoning behind the change was that asylum seekers who otherwise would be destitute are given access to rent-free accommodation, plus all utilities paid and council tax included. Therefore, we felt that the difference between being 24 and 25 was nothing-it was exactly the same. All of those things are provided, and this is an addition of money on top of that.
	As regards the other point, it is fair to say that it is something that needs to be looked at. I cannot give a promise that we will do that, but I certainly believe it is something that should possibly be looked at.

Lord Skelmersdale: Will the Minister confirm that by the end of next year, 2011, the UK Border Agency aims to conclude 90 per cent of new asylum cases within six months of application-in other words, to try and make this subvention as short as possible? There have been criticisms by the UNHCR and the Centre for Social Justice that six months is far too long. What is the noble Lord's response and what guarantees are in place to ensure that this target will be met?

Lord West of Spithead: My Lords, as the noble Lord says, our aim is that we will conclude all such cases within the six-month target. At the moment we have reached about 60 per cent, and we are marching towards achieving the target. Also, we are doing very well getting rid of the backlog that we had in these cases. It is very important that we look at these people very carefully and accurately, and I think we do that. The tightening of our borders has reduced the number of asylum seekers who are not real asylum seekers-people who are coming here because they want to work here and for other reasons-to about 24,000 in 2009 compared with 84,000 in 2002. This is a dramatic reduction in numbers. We have a very fair system. Real asylum seekers who deserve asylum are looked at very thoroughly and carefully and get asylum in this country. Those who come here for other reasons do not, as is appropriate.

Baroness Falkner of Margravine: My Lords, the Minister, in answering my noble friend Lord Avebury, justified increases for all categories by 5.2 per cent but not for people aged over 25. He did so on the basis that utilities costs did not apply to this category. Do they not apply to other categories as well? In other words, he can uprate for all other categories but this category. His explanation does not work.

Lord West of Spithead: My Lords, perhaps I did not make myself clear. The reasoning behind it was that it made no real difference whether a single asylum seeker, who was already getting his accommodation, council tax and all utilities paid, was 21 or 22, or 26 or 27. It made sense to have that as one amount of money. That was the basis on which it was done.

The Lord Bishop of Ripon and Leeds: My Lords, does the Minister support the sanctuary pledge, promoted by Citizens for Sanctuary and based on the findings of the Independent Asylum Commission, so that people seeking sanctuary can have access to essential support and public services?

Lord West of Spithead: My Lords, I have to admit to being not absolutely au fait with that specific issue. I think I can promise that we always make sure that we look after people who come here to try to gain asylum. We give asylum to genuine asylum seekers. That is something that we can be proud of in this country. I will write to the right reverend Prelate on the specifics of his question.

Lord Foulkes of Cumnock: My Lords, is my noble friend aware of the tragic case of the three failed asylum seekers in Glasgow, who committed suicide? Can he confirm that Glasgow is the only local authority taking on the huge burden and responsibility of looking after asylum seekers in Scotland? Will his department now reopen discussions with other Scottish local authorities to make sure that that responsibility is spread more widely?

Lord West of Spithead: My Lords, I cannot speak in detail on that case because what exactly happened is still being looked at. It is incumbent on all parties to make sure that these things are looked at closely and are dealt with. It is necessary for all of us to look at these things closely to make sure that such horrible events do not happen.

Lord Pearson of Rannoch: My Lords, of the figures given by the noble Lord, how many applicants are successful every year and how many applicants are returned overseas?

Lord West of Spithead: My Lords, I do not have that specific figure at my fingertips, but I think around 13 per cent were being returned and around 30 per cent were successful. Any expert in mathematics can work out that that is not 100 per cent. That is because many of these cases involve dual counting, duplication, wrong names and so on. There are a huge number of those. We have to take into account all of the backlog as well as the people currently coming in. If I have a specific figure for those coming in now, I will write to the noble Lord.

British Airways: Industrial Dispute
	 — 
	Private Notice Question

Baroness Hanham: To ask Her Majesty's Government whether they have taken or are considering any urgent action to avert the proposed strike by British Airways cabin crews or its impact on travellers.

Lord Adonis: My Lords, passengers will be seriously inconvenienced if a strike goes ahead. The Prime Minister and I have urged the union to call off the strike and urged both sides to seek to reach an agreement. We continue to do so. However, British Airways is a private company and the resolution of the dispute is a matter for the company and its staff. The Government have no powers to impose a settlement.

Baroness Hanham: My Lords, I thank the Secretary of State for that reply. While we welcome his words and those today of the Prime Minister in roundly condemning Unite's action, we want to know what else can be done to prevent the lives of millions of passengers being badly affected. Is not the real problem over this and the Government's ability to handle it that the Government have turned a blind eye for months to the growing crisis because the Labour Party has been funded by Unite to the tune of more than £11 million since the Prime Minister became leader, and Mr Charlie Whelan-one of the so-called forces of hell identified by the Chancellor of the Exchequer-is political director of Unite and up to his elbows in Labour's general election campaign? Will the Labour Party now stop taking donations from that trade union? Are the Government hampered in taking any action because of these donations?

Lord Adonis: My Lords, the noble Baroness's remarks were well below the level of events. This is an industrial dispute; it is not a political dispute. I deeply regret the attempt by the Conservative Party to politicise the dispute, which will make it so much more difficult for it to be solved in the way we all wish it to be. The Prime Minister's statement this morning could not have been firmer. My statement yesterday could not have been firmer. We wish to see this dispute resolved by negotiations, not by strike action. I continue to call on the union to lift the threat of the strike and get back to the negotiating table.
	In respect of arrangements made for passengers who stand to be severely inconvenienced, British Airways has put out a statement setting out how it intends to handle flights if the strike goes ahead. The statement on its website at the moment says:
	"We plan to operate all British Airways' flights from London City airport, including long-haul services to New York. From Gatwick, we plan to operate all long-haul services and about 50 per cent of short-haul. From Heathrow, we plan to operate a substantial part of our long-haul and short-haul schedule ... We are also in the process of obtaining seats on flights operated by other carriers to enable thousands of customers to fly to their chosen destinations".
	BA will give further details later today or tomorrow about precisely which flights will operate and which ones will not. BA is clearly therefore doing all it can to get early information to passengers. In this House, we should do all we can to urge both sides to reach a settlement so the strike does not take place.

Lord Bradshaw: My Lords, I thank the Secretary of State. We support the statement he made over the weekend which has been endorsed by his right honourable friend the Prime Minister today. Reports in the press indicate that the RMT union is planning serious disruption on the railways at Easter. This sort of action both in British Airways and on the railway is an attempt to blackmail employers, using the travelling public as a weapon. I know the difficulties which exist with private companies but I want the Secretary of State to exert every effort possible to ensure that disputes such as these are dealt with through arbitration rather than through the unacceptable measures that the unions are taking. These are not down-trodden and exploited workers. Many of them are among the better paid people. I really think that they and their unions have a duty to provide the public with the service they pay for.

Lord Adonis: My Lords, I entirely agree with the noble Lord that passengers should not be held to ransom in seeking to resolve industrial disputes. That applies to the railways as much as to the airlines.

Lord Clinton-Davis: My Lords, I speak as the president of BALPA. Does my noble friend agree that the Government should use their influence on both sides so that they abandon their preconceived views which are not helpful? It is imperative that they engage urgently in talks designed to resolve this absolutely stupid dispute.

Lord Adonis: My Lords, I entirely agree with my noble friend on the importance of both sides talking. They were close to a settlement last Thursday. If they could return to the negotiating table it might well be possible to avert this strike. I urge them to do so immediately.

Baroness Trumpington: My Lords, I declare an interest as a past chairman of the Air Transport Users Council. What part has the present Air Transport Users Council played in this strike?

Lord Adonis: My Lords, it has been urging that flights should continue. I am not sure that it has any locus to help bring the sides together or enable them to reach an agreement but I know it has spoken up strongly on behalf of the interests of passengers.

Lord Ryder of Wensum: My Lords, can the Minister explain what the Unite union is doing in its dispute with British Airways that is inconsistent with its overall responsibilities as a trade union and duties to its members?

Lord Adonis: My Lords, the question is whether it is possible to reach a settlement which meets the concerns of the unions without needing strike action. The two sides came very close indeed to such a settlement last Thursday. If they return to the negotiating table there is every reason to believe that it would be possible for them to reach a settlement which meets the interests of the members of the union without requiring strike action and the massive inconvenience and disruption that will be caused to the travelling public.

Lord Richard: My Lords, my noble friend has made his position and that of the Government perfectly clear as regards their attitude towards the union. Do the Government feel that British Airways should now retable the proposals it tabled last week and withdrew? I may be wrong but I understand that those proposals got within a whisker of being agreed by both sides. Should we not therefore be pushing British Airways, as well as the union, to do something?

Lord Adonis: My Lords, if both sides come together for negotiations, I am sure that the offer that was on the table last Thursday will be one of the matters that they wish to discuss. However, they need to get round the table and start negotiating seriously before that is possible.

Lord Hamilton of Epsom: My Lords, does not the fact that Unite is such a major donor to the Labour Party, which is very significant in the run-up to the imminent election, make it very difficult for the Government to condemn the trade union in the way that perhaps they should?

Lord Adonis: My Lords, if I may say so, that is a ridiculous question. It is equivalent to saying that, because some noble Lords opposite give very large sums of money to the Conservative Party, the Conservative Party should not be regarded as a legitimate force in this House. There is a proper system in place for party funding; everything is done within the law; and, as I said, this is an industrial, not a political, dispute.

Lord Stoddart of Swindon: My Lords, is it not better that the parties be allowed to settle their dispute in the proper way? The TUC has already been involved, as is perfectly proper, but surely it does not help if the dispute becomes involved in party politics. As the Prime Minister did this morning, we should be urging the parties to get together to have realistic negotiations, leading, it is to be hoped, to the resolution of a very difficult problem.

Lord Adonis: My Lords, that is precisely what the Prime Minister and I are urging both sides to do.

House of Lords: Members' Conduct and Expenses
	 — 
	Statement

Baroness Royall of Blaisdon: My Lords, with the leave of the House, I wish to make a Statement.
	Last year, when the House came under some scrutiny in relation to both Members' conduct and Members' expenses, I undertook to keep the House informed about major and relevant developments in this area. That is the purpose of my Statement today.
	Although uninformed criticism seeks to paint this House as resistant to change, this House has embraced sensible change, including the Life Peerages Act 1958, proposed by the party opposite, and the House of Lords Act 1999, proposed by this side of the House. I can confirm the Government's intention to bring forward proposals for further reform of your Lordships' House.
	In relation to financial support for Members of this House, a week today the House will debate proposals from the House Committee for long-term and permanent reform of the designation and declaration of Members' principal residences. The proposals are drawn from the work of the all-party ad hoc group established by your Lordships' House and chaired by the noble Lord, Lord Wakeham, following a review of financial support for Members of this House carried out by the independent Senior Salaries Review Body. The ad hoc group has been dealing with some very difficult issues and is now considering further matters referred to it by the leaders in this House and by the Clerk of the Parliaments. As a result, the group's examination of these issues is unlikely to be available until after the forthcoming general election. However, in advance of that, the House will have before it next week a rigorous definition of what constitutes a Member's primary residence and associated requirements on declaration.
	As the report from the House Committee putting forward the new proposals states, a main weakness of the current system has been the inadequacy of the definition of what constitutes a Member's principal residence outside London. The proposals from the House Committee detail new arrangements for the future but, at the same time, the Clerk of the Parliaments has been considering a number of complaints against Members of the House under the current arrangements for Members' expenses, which the new proposals will replace. As part of his consideration of these complaints, the Clerk of the Parliaments set out some general principles for what the minimum threshold of residence might be and he sought the endorsement of the House Committee for these principles, including what the minimum frequency of stays in a Member's main residence should be. The criteria that he proposed were endorsed by the full House Committee on 26 January on behalf of the whole House. It is these criteria that were cited by the Director of Public Prosecutions last week in relation to a decision that he had taken in respect of a Member of this House following an investigation by the Metropolitan Police. There has been considerable media criticism following the decision by the DPP, including unfair and unjust criticism of the Clerk of the Parliaments in this House.

Noble Lords: Hear, hear.

Baroness Royall of Blaisdon: My Lords, I deplore the media criticism of the Clerk of the Parliaments, who is a fine, conscientious and distinguished public servant.
	The changes that we will be considering next week will replace and supersede any and all previous definitions or criteria and will give this House a clear and robust system. I believe that they are valuable and important improvements and I will be strongly recommending them to the House. The systems that I hope we will have in place will be reinforced by the decision before this House tomorrow on new guidance for the code of conduct for Members of the House, which the House approved last year following the report of the Leader's Group chaired by the noble and right reverend Lord, Lord Eames. I look forward to the House approving the new guidance tomorrow.
	I know that these are difficult issues. They are issues that make many Members, including me, feel uncomfortable. However, just as we took clear and decisive action last year on issues of conduct, which led to the suspension, unprecedented in modern times, of Members of this House, so, too, we are now taking clear and decisive action on the issues surrounding Members' principal residences. At all stages, all sides of this House have acted in concert and in agreement. I thank the leaders of the principal political parties in this House and the Convenor of the Cross Benches for their positive, constructive and consensual support. I undertake again to continue to keep this House informed of developments and I look forward to the important steps that I hope the House will now take.

Lord Strathclyde: My Lords, I thank the noble Baroness for making that Statement and keeping the House informed. We face an enormous issue of public confidence in the House as a result of the actions-and perceived actions-of a few. It is a terrible day when the reputation of your Lordships' House is dragged through the mire. The overwhelming majority of Members of this House are honourable and act as such. I support the noble Baroness in the programme of action that she has outlined, which also included last year's unprecedented exclusion of two Peers found not to have acted in accordance with the code of conduct.
	We will, indeed, debate a new code of conduct tomorrow, which I trust will be supported. I also support the debate that we shall have next week on the new proposed definition of a main residence, although I regret that we will be unable to introduce a new regime for expenses this side of a general election, albeit for reasons that I understand. The expenses system that we currently have was recommended not by the House but by the SSRB. As noble Lords know, we on this side proposed a system of reform of expenses that would have swept away the regime of second homes and shut down scope for abuse, but the SSRB, in its recent report, did not support it. I therefore do not accept that all wisdom on this subject lies outside this House and I reject the widespread attacks on your Lordships' House.
	When abuse was uncovered, we moved with speed to put matters right. We must of course pay heed to public indignation and apologise for the causes, but the public should not underestimate the anger that most Peers-in what, let it not be forgotten, is an unpaid House-will feel against those guilty of abusing the trust of the House. There is a limit to what further comment I can make. Some cases will now be brought before the sub-committee on interests, where they must be heard with fairness but with the utmost rigour. I join the noble Baroness in rejecting the public attacks on the Clerk of the Parliaments, an outstanding servant of this House and a public official of the highest integrity. The Clerk of the Parliaments has, I know, tolerated no abuse; indeed, it was he who advised the House that it could revive its ancient powers to exclude Members guilty of misconduct.
	As a lay man, not a lawyer, I find it hard to see how a jury would not have taken a view on the whole range of factors on what constitutes a main residence, rather than a single point that, taken out of context, has received such publicity. I think that most of us know what constitutes a home and what does not. There will be grey areas, especially in a part-time, unpaid House, many of whose Members lead very different lives in recess. However, I venture to conclude with this: whatever the rights and wrongs in the small print, noble Lords who may have abused the system in any way should now examine their consciences and consider making amends for any profit that they have made in relation to what they will know, in their own minds, was not a main residence. I thank the noble Baroness the Leader of the House for keeping us informed of these matters.

Lord McNally: My Lords, I associate myself and these Benches with both the Statement of the Leader of the House and the remarks of the Leader of the Opposition. This House has been well served by the fact that there has been no attempt by either the government or opposition sides to get into a nuclear arms race of indignation. Instead, we have addressed the difficult problem of moving from what I once described as a vaguely drawn and lightly policed system to a more precise and fit-for purpose system, which we have done with due concern for the issues at stake. We have been well served by the Leader of the House, the Lord Speaker and the Clerk of the Parliaments. I thought that the attacks on him were outrageous; the House has already indicated its feeling about those unworthy statements.

Baroness D'Souza: I wholly support the Statement of the Leader of the House and the actions that have been and will be taken. I also look forward very much to the debates on the reports from the Privileges Committee and the House Committee that will take place this week and next week. I look forward to contributing at that time.

Sunbeds (Regulation) Bill
	 — 
	First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Child Trust Funds (Amendment) Regulations 2010
	 — 
	Motion to Approve

Moved By Lord Myners
	That the draft regulations laid before the House on 20 January be approved.
	Relevant Document: 6th Report from the Joint Committee on Statutory Instruments.Considered in Grand Committee on 8 March.
	Motion agreed.

Health and Social Care Act 2008 (Regulated Activities) Regulations 2010

Health and Social Care Act 2008 (Consequential Amendments No. 2) Order 2010

Tobacco Advertising and Promotion (Display of Prices) (England) Regulations 2010

Protection from Tobacco (Sales from Vending Machines) (England) Regulations 2010
	 — 
	Motions to Approve

Moved By Baroness Thornton
	That the draft order and regulations laid before the House on 19 and 27 January and 2 February be approved.
	Relevant Documents: 7th and 8th Reports from the Joint Committee on Statutory Instruments and 11th Report from the Merits Committee.Considered in Grand Committee on 8 March.
	Motions agreed.

Building Societies (Insolvency and Special Administration) (Amendment) Order 2010
	 — 
	Motion to Refer to Grand Committee

Moved By Baroness Royall of Blaisdon
	That the draft order be referred to a Grand Committee.
	Motion agreed.

Building Societies (Financial Assistance) Order 2010
	 — 
	Motion to Refer to Grand Committee

Moved By Baroness Royall of Blaisdon
	That the draft order be referred to a Grand Committee.
	Motion agreed.

Digital Economy Bill [HL]

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Third Reading

Baroness Royall of Blaisdon: My Lords, before we begin the debate it may be helpful for me to say a few words about Third Reading amendments. In line with the procedure agreed by the House, the Public Bill Office advised the usual channels on Friday that two amendments on the Marshalled List for Third Reading today fall outside the guidance in the Companion on Third Reading amendments. On the basis of that advice, the usual channels recommend that Amendment 1, in the name of the noble Earl, Lord Erroll, and Amendment 6 in the names of the noble Earl, Lord Erroll, and the noble Lord, Lord Whitty, should not be moved. As ever, this is ultimately a matter for the House as a whole to decide.
	Amendment 1 not moved.
	Clause 4 : Obligation to notify subscribers of reported infringements
	Amendment 2
	 Moved by Lord Whitty
	2: Clause 4, page 7, line 40, after "subscriber" insert "which have been the subject of notifications sent after the effective date of an order made by the Secretary of State under section 124H"

Lord Whitty: My Lords, I am allowed to move Amendment 2, and in doing so I declare my usual interest as chair of Consumer Focus.
	The amendment, which is fairly straightforward, is intended to ensure that notification of apparent breach of copyright by subscribers in a notification letter should not count towards any subsequent imposition of technical measures until after Parliament has decided that we should move to technical measures. However, I need to put this in a rather wider context. Those of your Lordships who have been present during earlier stages of this debate will know that I am not enamoured of Clauses 4 to 18, both from my concern as a consumer representative and from my concern about human rights. The Minister may be pleased to hear that I owe him an apology in relation to one aspect of the Bill where I misunderstood the intention. However, in general, although the Government have ameliorated some aspects of the Bill in the course of the Committee and Report stages, the basic problems still remain. So although this is a specific amendment, it goes to the heart of the way in which the Government propose to deal with the issue of online copyright infringement.
	I regret to say that during the course of our consideration of the Bill, we have seen one of the worst examples in my memory of the political parties being captured by a producer interest. That applies not only to the Government and the bringing forward of the Bill, but to the opposition Front Benches as well. Indeed, we had the extraordinary position of the Liberal Democrat Front Bench, including the noble Lord, Lord Clement-Jones, who I know to be a decent and liberal chap in most of his political endeavour, bringing forward an amendment-which is now Clause 18-that is actually more draconian than the Government's Clause 17. I hope that at some point, when we reach that stage, they will recognise the error of their ways.
	Unfortunately, in terms of the balance of debate within this House, we seem to have a near unanimous position in support of the government proposals. Apart from the noble Earl, Lord Erroll, the noble Baroness, Lady Miller, myself and one or two others who have appeared maverick in this debate, this House seems to have accepted the wisdom of going through a whole range of changes in our approach both to the law and to the way in which our digital media operate. We have imposed police powers on ISPs which are reluctant to accept them. We have threatened several millions of our citizens with exclusion from the internet by administrative decree, with dubious means of identifying who was actually the perpetrator of the alleged infringement. We have seen the Government, putatively this House and other political parties backing protectionism rather than competition and innovation, moving towards an exclusion of people from digital access rather than the inclusion that the rest of the Bill-which I fully support-provides. It has landed us with a pretty much unenforceable law that will get a penny back to the rights owners whom the legislation was intended to support.
	Out there, however, there is no unanimity at all. There is a very widespread opposition to the Bill from individuals who feel threatened, from parents who are concerned that measures will be taken against them because of their children's use of the internet and from employers who are worried about the same thing in relation to their staff. Surveys conducted by my organisation, Consumer Focus, indicate that 75 per cent of the population do not understand what is lawful and unlawful in this context and that a rather higher proportion, when told what is lawful and unlawful, do not support those laws.
	There are alternative ways of moving to a different system of accessing copyright material on the internet. Lawful systems of file-sharing exist in the music industry and elsewhere; it is just that they have a very low recognition by the public. The survey that we conducted showed that, of the 20 such systems that are or have been in operation, none has received an awareness level above single figures in percentage terms. Yet, ultimately, at various points in this debate, we have all agreed that a move to lawful systems of file-sharing is the aim of this measure.
	Anxieties about the throttling or suspension of their internet connections have been expressed by people who will not be perpetrators. This includes not only businesses and parents, as I mentioned, but also the hotel trade-which provides access to the internet as part of its services to guests-libraries, colleges and other institutions whose students use the internet and wi-fi facilities. The Government have sort of acknowledged those anxieties but they have done nothing about changing the Bill to recognise them. They say that it will all be taken care of in the wash, as Ofcom develops its code with the industry, and that all these things will be clarified and no one needs to be anxious about them.
	However, despite a few ameliorations, this is still a bad Bill. It is bad for the digital rights holders to press their interests in this way, when there are alternatives, and it is bad for the Government to risk alienation of a very significant part of the population by enforcing these measures. My noble friend Lord Puttnam-who probably takes a different view from me in terms of supporting the digital rights owners-said a very wise thing earlier in the debate, namely that the Bill would clearly have benefited greatly from pre-legislative scrutiny in which we could have looked at all the options.
	Instead we have a Bill that does virtually nothing to encourage ways of bringing together the rights holders-the ISPs and lawful file-sharing operators-so that new business models could be developed. It could provide to the punters, and certainly to the casual users who are not making any money out of their copyright infringement, the ability to access cheaply, freely and flexibly through the new business models provided by those systems.
	Surely that is the road that we should go down, to move from the impossibility of pursuing millions of people under these arrangements to a situation where there are lawful means of gaining access and the only people who will continue to be accused of infringement of copyright are those who are making money out of it or who are such mega-multiple-serial offenders that some punitive measures are necessary.
	If we are to move to a more positive arrangement where most file-sharing is done lawfully, then an educational process will have to take place. All sides of the House have recognised that. My noble friend the Minister, like others, has said that stage 1 is an educational stage. However, it is not simply an educational stage. It is the beginning of measures whereby a subscriber can be designated and accused of an apparent infringement of copyright, which can eventually lead, through proceedings under the Bill, to a situation where draconian measures to throttle, cut off or suspend digital access are imposed.
	As I said, I have an apology to make to the Minister. I misunderstood the provision on the second-tier appeals procedure, which I thought was another part of the body to be set up by Ofcom; in fact it is a separate body and has a quasi-judicial function. However, I am not entirely clear that that meets all the requirements of European law on the telecoms package. Even if it does, it does not alter the fact that, at the beginning of this process, an administrative body will be threatening and imposing a sanction that is not subject to due process and where the subscriber is effectively regarded as guilty until proved innocent.
	I know that the Government and others in this House do not accept that, but that is how it will seem to millions of subscribers. The Government would have a more positive story to tell were they to accept that stage 1 is genuinely an educational stage and to say that they will use it not only to inform people of the copyright situation but to encourage the various parties to get together to develop and provide lawful means of accessing copyright material. That period should be tried for at least 18 months or a year after the Bill is passed and the code is drawn up. We will in practice need a somewhat longer period to assess that, but that at least gives a clear-cut distinction between stage 1, which is educative, and a decision by affirmative resolution of Parliament that we should move to stage 2, with all the penalties involved.
	This amendment therefore says that those notifications to individual subscribers, who may or may not be the actual perpetrators, should not count towards the accrued total which would trigger the sanctions in stage 2-the technical measures by which we mean cutting back or cutting off access to the internet-until Parliament has decided that that is necessary because we have not made sufficient progress towards reducing unlawful copyright infringement or developing lawful means of accessing copyright material. Until Parliament has said that, no notification should count towards a subsequent penalty. After that point-when Parliament has decided on an affirmative resolution based on the Secretary of State's assessment of the situation, which will itself be based on a detailed Ofcom report-if we need to move to technical measures, any notification letter should count.
	This amendment will ensure that they do not count at the first stage and that they will be regarded, as my noble friend the Minister has said, as educational and informative. That would remove many anxieties among the public and it would certainly remove a significant number of my own. I have put this in a wider context which needs to be borne in mind, partly because this is the last opportunity to do so-and I promise not to speak at great length to subsequent amendments. The Government have an opportunity, if they were to accept this amendment, of allaying some of the anxieties, including, to some degree, some of my own. That would put this section of the Bill on a much more positive note. I would therefore hope, and expect, that my noble friend the Minister will be able to accept the amendment. I beg to move.

Lord Razzall: My Lords, I did not intend to speak on this amendment, but I cannot allow the remarks of the noble Lord, Lord Whitty, or rather the chairman of Consumer Focus, whose interests he is clearly representing here today-

Lord Whitty: My remarks represent my personal view. In fact, Consumer Focus may be slightly more conciliatory, so I ask the noble Lord to withdraw that remark.

Lord Razzall: I think the noble Lord, Lord Whitty, should withdraw the remarks he made about my noble friend Lord Clement-Jones. A number of us have spent many years trying to wrestle with this problem. I understand that the noble Lord, Lord Whitty, has obviously come to it relatively late.
	The Government have engaged in an extensive consultation to try to find the right balance between the rights of the copyright owners and the rights of the consumer. What concerns me about the comments of the noble Lord, Lord Whitty, is that a number of the things he has said about this Bill are simply not true. I am sure that the Minister will deal with that.
	What worries me more particularly, apart from the intention of delaying the provisions, is that despite the fact there has been extensive consultation and significant movements by the Government to try to get the right balance between the rights of the copyright owner and the rights of the consumer, no proposal comes from the noble Lord, Lord Whitty, as to how the interests of the copyright owner should be protected.
	It is a perfectly sustainable position that a lot of people take that everything on the internet should be free and that everyone should be allowed to download for free; most 18 to 23 year-olds take that view. I completely share the noble Lord's view that this requires a significant educational process. The creative industries have now spent three, four, five or six years endeavouring to get a structure in place that will get the right balance between the interests of the copyright owners and the rights of the consumer, and we cannot suddenly now say, "Let us tear that up and start again". That is essentially what this amendment says. I am afraid we cannot support it from these Benches.

Lord Puttnam: My Lords, I very much hope that this is the last time I will speak in what has been a very protracted series of debates seeing this Bill through to its passage down the corridor. I find myself in a very odd, paradoxical situation. The noble Lord, Lord Whitty, is right: I bow to no one in my defence of the rights of legitimate copyright owners and also in maintaining that-in my judgment-the creative industries will eventually atrophy unless adequate protections are created and a respect for copyright is developed.
	Having said that, I disagree with the noble Lord, Lord Razzall. I do not believe that enough has been done, or enough intelligence brought to bear, in creating a serious balance between what I would refer to as free-use protocols and copyright protection. The ball was dropped badly early on by the failure of the Government to understand that, in exchange for a firm commitment to protect copyright, a review should have been undertaken of those areas in which copyright could be freed up. We have done a pretty good job in this House in the area of orphan works, but there are many other areas where copyright unnecessarily prohibits educational use as well as any number of other uses-clip rights, for example, in the film industry. A trade-off should have been orchestrated early on between firm protection on the one hand, and optimum free use as advocated by the Creative Commons movement on the other. That was the first missed opportunity.
	As to the other missed opportunity-I would be grateful if the Minister would help me on this-why on earth were the ISPs early on allowed to wriggle off the hook of their obligations as part and parcel of the value chain by which copyright material creates revenues and reaches customers? What kind of strange double think was it that allowed the ISPs to believe they were not part of that value chain? I used an analogy on the radio the other day which is not unreasonable: it is rather like the owners of chemist shops deciding that they have no responsibility for what prescription drugs are or are not sold over their counters. Every chemist understands that if you open a chemist's shop you immediately take on a series of clear responsibilities-not only health and safety responsibilities but responsibilities for the products you sell. How was it that the ISPs managed to convince the Government that they were not part of a legitimate value chain with all the responsibilities that come with it? This is what puzzles me most. I sincerely believe that it lies at the core of the problems with the Bill, and I would be grateful if, at this very late stage of Third Reading, the Minister could explain to the House exactly how this occurred.

Baroness Miller of Chilthorne Domer: My Lords, the disquiets I had at Second Reading have not been dissipated, and I join the noble Lord, Lord Whitty, in many of his remarks. My disappointment is that normally this House is assiduous in making sure that due process is seen to be done in Bills. The fact that we are not going to be allowed to debate and come to a conclusion on Amendment 6 reflects poorly on the Government, but I accept that the usual channels have no doubt agreed that it will not be debated. However, the amendment encapsulates some of the principles that the noble Lord, Lord Whitty, was talking about. The Bill refers to a study of the efficacy of techniques, but this House will not be allowed to take a view on whether an economic and social impact assessment should be undertaken. That is the heart of the matter.
	People like me who worry about what is in the Bill have never disputed that the creative industries need protection-I thoroughly agree that they do. However, I have felt all the way through the Bill that there are not sufficient checks and balances to protect the consumer. In particular, when a person, an institution, an internet café or a university is accused of transgressing these rules, it will hit the individual very hard. How will they disprove the accusations? They will have to employ a computer expert to counter the argument but there will not be legal aid for this; the money will not come forth. We should have debated these issues in this House. I believe that we would have come to the conclusion that we should protect the consumer better.
	The real problem is that the other House also will not be able to come to any conclusion about this issue; its Members will get only a Second Reading. They will not have a chance to put amendments forward on behalf of their constituents to make the Bill better balanced. Given the imminent election, it is incumbent on the Government to include the checks, balances and concessions for which we have asked.

The Earl of Erroll: My Lords, I wish to make a couple of remarks, as I have my name down to this amendment. I thank the Minister for being so patient with us for raising so many points as we went round and round certain issues several times, seeking different ways of trying to get consumer protection. I know that this has been a difficult time for the Minister. I am sorry when he half rises to his feet and then has to sit down again. I wondered whether we should excuse him from doing so because of his hip. Perhaps he could just stand back from the Dispatch Box if we interrupt his speech and we could-in our courteous way-allow him a slight degree of latitude as regards our conventions.
	This Bill is supposed to be based on the Digital Britain report produced by the noble Lord, Lord Carter, which encapsulated a vision of a future based on a digital economy. However, it contained considerable consumer focus; this Bill does not. A couple of issues that helped the consumer could have been included, but unfortunately I received notice earlier this afternoon that they lay outside the rigorously rigid rules for Third Reading, and therefore the usual channels had disallowed them. I had notified the Bill team of them because they might have helped to clarify some points for the general public, who will be watching this debate with interest. It may interest your Lordships to know that "Panorama", at 8.30 pm tonight-

Lord Williams of Elvel: My Lords, I apologise for intervening, but the noble Earl must remember that we have a Companion to the Standing Orders, which is agreed by the whole House. It is not just a question of the Government or the usual channels; Third Reading amendments are subject to the guidance which has been agreed by the whole House. It is not a matter for the Government at all.

The Earl of Erroll: The noble Lord has not seen my e-mail in which I argued that I thought the issues were just within the bounds for various reasons. However, we should not be debating that now, for the very reasons that the noble Lord has just given. That issue might be worth taking up because they were different in emphasis. My Amendment 6, which has been refused, was not the same as the others, which offered enforceable protections to the consumer. Amendment 6 sought purely to produce a report and impact assessment for the same class of people through Ofcom. It did not have the same force as the previous amendments that we had tabled. Perhaps that is not allowable; perhaps it is. It is the sort of debate that this House should have. The matter should not be decided by just a small cabal of Front-Benchers.
	The real trouble with the Bill is that it is highly unusual. We should not pass legislation in this way. The Bill is entirely a product of your Lordships' House. It will go to another place and will receive a Second Reading. One is told that no amendments will be permitted to it. Many Members of the other place are extremely annoyed about that and are very upset that the Bill cannot be amended at all. The form in which the Bill leaves this place is that in which it will pass into law. Therefore, our rules at Third Reading should be much less rigid considering that this is the last time that amendments can be put down. It is a very dangerous way in which to pass legislation; in fact, it is unethical. As I have said before, if we were directors of a company we would probably be locked up for failing to undertake proper governance. Parliament should not behave in this way.
	As I say, noble Lords may be interested to hear that "Panorama" at 8.30 pm tonight on BBC1 will be devoted entirely to this Bill. It will be interested to see what balance is struck in the arguments. I have no idea what is in the programme-

Lord Fowler: Watch Sky.

The Earl of Erroll: The channel is 101 on my Sky machine, and it is at 8.30 pm tonight, if that is of any assistance to the noble Lord.
	There has been an escalation in notifications being sent out-without this Bill being in place-from various law firms, particularly American law firms. If these notifications are already piling up and are counted from day one, some people will have a huge handicap at the starting blocks. This amendment is essential as it would enable us to say, "We are drawing a line. We now have new legislation. We are going to move forward under the rules of this legislation. Therefore, notifications issued under previous legislation that might have existed will not count towards the various measures that might be introduced under this legislation". It is entirely sensible to have a proper start point. I would be very surprised if anyone wanted to turn this down.

Lord Young of Norwood Green: My Lords, I do not believe that we should accept the amendment. It is very clear under new Section 124G(2) of the Communications Act 2003, inserted by Clause 10, that technical obligations can apply only in relation to relevant subscribers, and relevant subscribers are those who are included on a copyright infringement list. It would not be sensible, therefore, to suggest that copyright infringement reports produced prior to the order imposing technical measures should essentially be set aside; they are the basis on which the subscriber is "relevant".
	It was neither helpful nor even fair of my noble friend Lord Whitty to suggest that everybody else was captured by external interests. We have had long, serious debates on these issues which have examined every facet of the legislation. It is untrue that the Government are backing protectionism as opposed to innovation; indeed, we have taken the opportunity time and again to say that there is a duty on copyright holders to produce legal means of access. My noble friend pointed to a poll indicating that 75 per cent of the population do not understand what is lawful and what is not. About that, I would say that it depends how you put the question.
	My noble friend needs to make up his mind about stage 1. First, he said that you were more or less found guilty at stage 1; the next minute, he described it as an educational stage. He is right in the latter description: it is of course educational. Moving towards any possible sanctions under technical measures would be a long process. I shall not reply to every nuance of my noble friend's argument, because we have debated the points time and again. Unfortunately, we must agree to differ.
	My noble friend Lord Puttnam said that we had missed opportunities. He may be right, but we have tried as hard as we can. The Government have recently published a copyright strategy which looks at copyright broadly and the balance between owners, users and consumers at a European level. It may not be the total answer to what my noble friend requested. We perhaps do not have time today fully to debate the role of ISPs, although we will perhaps touch on it in later clauses. Attempts have been made to encourage ISPs to recognise that they have a role to play, certainly in relation to pornographic and paedophile material, where they have been expected to take action.
	The noble Baroness, Lady Miller, again said that she was disappointed. Her analysis was similar to that of noble friend Lord Whitty. She does not agree with the direction that we have chosen to take. I am afraid that it is not possible to satisfy her in those circumstances.
	I thank the noble Earl, Lord Erroll, for his concern. I assure him that I can rise to the occasion today.
	When it was said that we had not given the matter enough scrutiny, I could not help but wryly reflect that a 48-clause Bill that has had about 430 amendments tabled to it seems to me a fair amount of scrutiny. If we took the time and trouble to look at how many times we have debated the same issue, I think that we would refute that charge.
	I return to the amendment. As I have said, it is not a question of imposing technical measures immediately. We have already made a number of amendments, one of which included a year's interval before such measures could even be considered. However, this does not mean that everybody who thus qualifies as a relevant subscriber will suddenly find themselves subject to a technical measure once an order has been made. New Section 124G(2), in Clause 10, defines a "technical obligation" as,
	"a technical measure against some or all relevant subscribers".
	This should be read in conjunction with new Section 124H(3) and (4) in Clause 11, which say that the order must specify the date from which the technical obligation should have effect and the criteria for taking the measure.
	This gives the Secretary of State the flexibility to make an order that can be targeted-ensuring that those posing most threat can be tackled and those who may perhaps have been unfortunate or have changed their behaviour will be outside such technical measures. In short, while it is clear that copyright infringement reports produced prior to any order being made under Clause 11 remain relevant in terms of whether a subscriber is on a copyright infringement list and is therefore a relevant subscriber, there is sufficient flexibility in the system to ensure that any technical measures are imposed fairly and with fair warning. On this basis I hope that the noble Lord can feel able to withdraw this amendment.

Lord Whitty: My Lords, I am obviously disappointed in that. This Bill, as my noble friend recognises despite his calm and patient dealing with the long scrutiny we have gone through, makes me quite angry. It is true, as the noble Lord, Lord Razzall, said that there was a lot of consultation prior to the publication of the Bill when this issue was being discussed. However, the representations made by consumer interests, educational interests, the ISPs and many others were not taken into account.
	For the sake of future peace and harmony and good relations, I withdraw any implication that individuals are captured by producers. If people interpreted that personally, I apologise. It is nevertheless the case that the views, particularly of the music industry, have been pressurising Government over the past few years throughout this whole process. When the Government modified their position slightly, following the report of the noble Lord, Lord Carter, the pressure came back on and it was tightened up again.
	I think there is an imbalance in this Bill. The amendment was not intended to destroy the structure of the Bill-I do not agree with the structure of the Bill but we have debated all that. It was intended to say that the first stage, which the Government themselves have said again today is an educational stage, should indeed be an educational stage. It should not be the start of a process that could end in very substantial sanctions. That would seem to me, if you were starting from scratch, a very sensible way of proceeding. As the Bill stands, it is only an 18-month delay that I am talking about and that is already built into the Bill. It would simply be that when you are sending notification letters to subscribers, who may be utterly unaware that any infringement has taken place, the letters should not accumulate until this House, and this Parliament, have decided that technical measures-namely, heavy sanctions-are actually required.
	In normal, calmer circumstances certain Members of the House at least may well have accepted that argument. I certainly think that it would have been a major argument in another place. Given the present circumstances, I felt it necessary to make my case for this relatively minor amendment which accepts the general structure the Government have now put in place to ensure that we did in fact get a positive outcome; that is, a lawful system under which consumers can access copyright material. I agree with the noble Lord, Lord Razzall, that digital rights holders have rights in the digital system. We want some return to them but actually this system does not give any return to rights holders. Closing down a significant number of subscribers does not mean that any money whatever goes to the creative artists. The only people who will immediately benefit from it are perhaps a few well-heeled organisations and their rather unscrupulous lawyers. It is not beyond imagination that those who are hit by this sanction will immediately go out and buy a copy of the original work. Quite where the £200 million that the Government expect to go back to digital rights holders emerges from this process, I am not clear-whereas, if we move to what my noble friend Lord Puttnam described, with the ISPs, file-sharing systems and digital rights holders getting together to create a lawful system, which would be accessible, a guaranteed income would go to the digital rights holders. This Bill does not guarantee income for the digital rights holders.
	As we go down the line, that may become more apparent. I am hoping that in the process of the code with Ofcom, some of these things may be clarified in a direction that I can support. At the moment, I cannot support this Bill. I recognise, from the opinions expressed around the House, that I should not break the habit of a lifetime and ask the House to vote against the Government. However, I deplore the Bill and am afraid that there is nothing that the noble Lord can say-or my noble friend the Minister, who I hope soon recovers from his affliction. I apologise if this Bill has made his affliction worse and commend his patience and that of his colleagues in dealing with this and other legislation. However, nothing will convince me that this is right. I suspect that, further down the line, we will find that it is horribly wrong and we will be back here in three or four years' time, trying to find some other way of dealing with this situation. Until that point, I withdraw my amendment.
	Amendment 2 withdrawn.
	Clause 8 : Contents of initial obligations code
	Amendment 3
	 Moved by Lord Young of Norwood Green
	3: Clause 8, page 12, line 12, leave out from "relate" to end of line 13

Lord Young of Norwood Green: My Lords, I am proposing this group of seven amendments, which are needed for the purpose of tidying up the Bill rather than for any new policy purpose. For example, the first amendment, which removes text from new Section 124E(5) in Clause 8 is because it is otiose for paragraph (d) of that subsection to cover "any other matter" when the opening words of the subsection already refer to "any matter" at page 12, line 8. All the other amendments do a similar tidying up job.
	It is inevitable, given the number and the pace of the amendments that we considered at Report, and following a very full debate in Committee, that these sorts of things are picked up later. While they do not effect any policy changes, it helps the readability and understanding of the Bill if we put these things right when we spot them. On that basis, I beg to move.
	Amendment 3 agreed.
	Amendment 4
	 Moved by Lord Young of Norwood Green
	4: Clause 8, page 12, line 23, after "disputes;" insert-
	"( ) that there are adequate arrangements under the code for OFCOM to obtain any information or assistance from internet service providers or copyright owners that OFCOM reasonably require for the purposes of administering and enforcing the code;"

Lord Young of Norwood Green: My Lords, in earlier debates on these provisions we have discussed, and agree, the need for Ofcom to be able to require information and assistance from both internet service providers and copyright owners in their assessment of the need for technical measures. It goes without saying that Ofcom will need similarly to be able to require information and assistance from the same parties in carrying out their duties in administering and enforcing the codes. Section 135 of the Communications Act gives Ofcom wide powers to require information to carry out its functions under that Act. However, it is possible that a copyright owner might consider that the provision does not apply to them or that a copyright owner or ISP would argue that these functions of Ofcom under the codes are not covered by the existing power and would seek to challenge a request from Ofcom for advice or information. It is that possibility, and any resulting difficulties in administering or enforcing the code, that we are seeking to avoid by putting this obligation clearly and explicitly on the face of the legislation. I believe this is a sensible and uncontroversial point and I beg to move.
	Amendment 4 agreed.
	Clause 10 : Obligations to limit internet access: assessment and preparation
	Amendment 5
	 Moved by Lord Young of Norwood Green
	5: Clause 10, page 14, line 24, leave out from "subscriber" to end of line 25 and insert ", within the meaning of section 124B(3), in relation to the provider of the service and one or more copyright owners."
	Amendment 5 agreed.
	Amendment 6 not moved.
	Clause 12 : Code by OFCOM about obligations to limit internet access
	Amendment 7
	 Moved by Lord Young of Norwood Green
	7: Clause 12, page 15, line 38, leave out "made"
	Amendment 7 agreed.
	Clause 13 : Contents of code about obligations to limit internet access
	Amendment 8
	 Moved by Lord Young of Norwood Green
	8: Clause 13, page 16, line 41, after "disputes;" insert-
	"( ) that there are adequate arrangements under the code for OFCOM to obtain any information or assistance from internet service providers or copyright owners that OFCOM reasonably require for the purposes of administering and enforcing the code;"
	Amendment 8 agreed.
	Clause 14 : Subscriber appeals
	Amendments 9 to 11
	 Moved by Lord Young of Norwood Green
	9: Clause 14, page 18, line 5, after "done" insert "(or, if there is more than one such report, as respects each of them)"
	10: Clause 14, page 19, line 15, leave out "or abandoned any appeal"
	11: Clause 14, page 19, line 17, after "determined" insert ", abandoned"
	Amendments 9 to 11 agreed.
	Clause 16 : Sharing of costs
	Amendment 12
	 Moved by Lord Whitty
	12: Clause 16, page 20, line 18, at end insert-
	"and shall, in relation to any provision for payment by subscribers and the funding of their own costs, first be subject to an economic and social impact assessment confirming that relevant subscribers are not in practice, by reason of such provision(s) or the incidence of costs, prohibited from effectively exercising their rights under section 124K (subscriber appeals)"

Lord Whitty: My Lords, Amendment 12 is much more straightforward and I hope that the Government will be prepared to accept it. At some stage during the Bill it was determined that not only should the ISP share the cost with the digital rights owners, but also, in certain circumstances, the subscriber should. I can conceive of situations in which this would be legitimate and in which the subscriber's behaviour could lead to them sharing the costs. However, in general it is not legitimate. It is certainly not fair and it is not due process that the subscriber should be charged the cost of what is, effectively, the digital rights owners trying to pursue their rights.
	My amendment would not delete the possibility of the subscriber being asked to meet part of the cost, but it would mean that the imposition of that cost would not inhibit the subscriber from taking forward an appeal against the sanction. In other words, the share of the cost imposed by the tribunal should be assessed in terms of its economic and social impact on the subscriber and whether or not their potential share would prevent them from taking this further and being able to make an appeal. As the noble Baroness, Lady Miller, said, this is not subject to legal aid, so the cost of an appeal is a very relevant consideration. If this imposition of cost inhibits people from taking their right to appeal, that is a very dangerous road to go down. This does not alter anything else that the Government have in the Bill; it would simply protect more vulnerable consumers from the imposition of costs. In that respect, I would have thought that the Government could accept it. I beg to move.

The Earl of Erroll: My Lords, I have put my name to this amendment because I have seen how the threat of costs has been used to blackmail people into not appealing, particularly in employment, with very small employers. For example, an employee may leave for whatever reason; the employer may have done nothing wrong but it does not dare to defend itself because of the threat of costs. I would hate to see that read across into this Bill. We have previously discussed the behaviour of certain firms of solicitors. I understand that that cannot be stopped immediately-it is not simple and the whole thing would be very long-winded. However, something like this amendment would be a sensible way of stopping abuses from day one.

Lord Young of Norwood Green: My Lords, this amendment addresses an important issue. It is essential that subscribers have the ability to appeal against notifications and decisions, both in terms of the appeals structure being in place and in terms of the ability to utilise the appeals process without undue financial concern. Thus far I am happy to agree with the noble Lords. However, I am not convinced that the sort of social and economic impact assessment advocated is proportionate, nor do I think that we need to see this in the Bill. Rather, this is exactly the sort of issue that should be raised as part of the consultation that we would conduct on a statutory instrument on the sharing of costs in the event of technical obligations being imposed.
	I understand that we need to look at this in the round and that the issue is not just the refundable fee, which we have discussed before in this House. We have given assurances on that front: there should not be costs that would inhibit the process of appeal. However, because this is such an important issue, it will certainly be part of the consultation on both the statutory instrument that would introduce technical obligations and the statutory instrument that would be needed to order the sharing of costs in-I stress this-the event of technical measures being applied.
	The consultation that we will shortly launch applies purely to the regime under initial obligations. We will of course be asking within that consultation whether and how subscriber contribution should be dealt with, although, as I have said on a number of occasions, we have given our views about appeal charges not inhibiting an appeal at the initial obligations stage. That being the case, and with the assurance to my noble friend that I fully appreciate the importance of what the amendment is addressing, I hope that he will feel able to withdraw it confident that the issue will be fully and properly addressed when it becomes relevant.

Lord Whitty: My Lords, I welcome the assurance that this will be taken into account when the secondary legislation and the code are drawn up. On the basis of that assurance, I beg leave to withdraw the amendment.
	Amendment 12 withdrawn.
	Clause 17 : Interpretation and consequential provision
	Amendment 13
	 Moved by Lord Young of Norwood Green
	13: Clause 17, page 21, line 46, leave out "for the time being"
	Amendment 13 agreed.
	Clause 18 : Preventing access to specified online locations for the prevention of online copyright infringement
	Amendment 14
	 Moved by Lord Clement-Jones
	14: Clause 18, page 22, line 16, at end insert-
	"(1A) The copyright owner applying for an injunction under subsection (1) shall first have given notice to the service provider in accordance with subsections (1B) to (1F).
	(1B) The notice must be in writing, deliverable electronically, contain the name, registered address and contact details of the copyright owner claiming infringement, and prove, by digital signature or otherwise, that it comes from the said copyright owner.
	(1C) The notice must be addressed to the address or agent designated by the service provider for the receipt of such requests.
	(1D) The copyrighted work of the owner claimed to have been infringed must be stated, or, if multiple copyrighted works at a single online location are covered by a single notification, a representative list given of such works at that site.
	(1E) Information must be included reasonably sufficient to permit the service provider to locate the online location to be blocked.
	(1F) The copyright owner must also take reasonable steps to deliver a copy of the notice to the operator of the online location."

Lord Clement-Jones: In moving this amendment, I will also speak to Amendments 16, 21 and 22. There are different views about the merits of the Bill that we have so carefully discussed over the past three months and there is clearly much to discuss in the other place. Of course, there are still some unsatisfactory aspects. My noble friend Lady Miller mentioned the major problem that remains with use of the internet by libraries and universities. The noble Lord, Lord Puttnam, had some good points to make about the freeing up of copyright laws, which will mean the implementation of some aspects of the Gowers report that were not included in the Bill. Orphan works are another area that will leave this House in an unsatisfactory state.
	However, I strongly disagree with the noble Lord, Lord Whitty, who seems to have suggested in today's debate that we have all been wasting our time for the past three months. I certainly do not accept that. I am quite clear that the Bill leaves this House in far better shape than when it arrived. The Government's willingness to listen and to make changes to Clauses 4 to 16 is partly responsible for that. On these Benches, we have played our part to help significantly alter the Government's original proposals relating to illegal P2P file-sharing and the possible introduction of technical measures. We take some satisfaction that there is now an explicit assumption, contrary to what the noble Lord, Lord Whitty, said, of innocence until proven guilty. None the less, the Government strenuously and rather bafflingly, throughout our deliberations on the Bill, insisted on the retention of Clause 17. These Benches opposed and helped to defeat the Government's proposals, which would have given them wide powers to change copyright law by order.
	These amendments consist of a number of clarifications and improvements to the amendment that was introduced on Report to insert a new Section 97B into the copyright Act. I do not accept that the amendment that we voted on at Report is worse than Clause 17, but these amendments are much more targeted. I certainly do not accept that all this is evidence that we are in the pockets of the music industry. The music industry was mad keen-as indeed were many broadcasters and sports organisations-to keep Clause 17. I see that the noble Lord, Lord Triesman, is in his place. He made a passionate speech about Clause 17. The industry wanted Clause 17. New Section 97B is very much a second string in those circumstances.
	We drafted new amendments as a result of discussions with the Open Rights Group and others, which we believe will go some way towards meeting the objections of critics. They may not be officially endorsed by the Open Rights Group, but we are grateful for its assistance none the less.
	Amendment 14 would provide that a notice of a request for blocking must be given to service providers and online locations in the prescribed form. Amendment 16 would require courts to consider whether an injunction would disproportionately prejudice legitimate uses and legitimate users of the online location. This is to deal with any issue where an injunction could be used to disproportionately affect sites such as YouTube. Amendment 21 clarifies that the courts would determine costs where an injunction had been granted. In order to make the process more even-handed between an ISP and a rights holder, there is no presumption as to costs. Amendment 22 would create a remedy whereby innocent parties affected by requests for blocking where no court order was sought would have access to appeals via the courts and the ability to claim compensation.
	These amendments would help to rebalance the clause and are worthy of support. Without wishing to pre-empt the noble Lord, Lord Howard, I indicate our support for the other amendments in the group. I beg to move.

The Earl of Erroll: My Lords, I assume that the noble Lords, Lord De Mauley and Lord Howard, will be speaking to their amendments in this group, which I support. I do not like Clause 18 at all, which is unclear in certain areas. I have tabled a set of amendments, which we shall debate immediately after this, to clarify the issue of search engines, which I am assured will be trapped by what is proposed. I asked for those amendments to be degrouped; I think that the issue needs to be looked at separately, as there may be some people who feel very strongly about it. It will be very brief. The amendments in this group go some way towards improving Clause 18. I still do not think that it would be perfect, but anything is better than nothing. Therefore, I will support the amendments. This clause cannot, however, be made perfect that easily. It needs a lot of thought, but these amendments are a good start in the right direction.

Lord Howard of Rising: The noble Lord, Lord Clement-Jones, has put the point that needs to be made on this clause extremely adequately, so I will not waste the House's time any further. I look forward to hearing what the Minister has to say.

Lord Lucas: My Lords, I am delighted that we are making progress in this direction. Whether the Government will listen to the siren voices of British Telecom and others saying that this is a step in the wrong direction, I do not know. It seems to me that that was where Clause 17 was aiming. The Government wanted to get away with something much broader and much less definite and, now that they are confronted with something specific, they seem to be running away from it. That shows how right we were to delete Clause 17. There are clearly major issues to be settled.
	We ought to be making it inconvenient for people to find illegal material. There will always be people who will go to great lengths to find stuff that they should not. They are a small minority and it takes a lot of their time. We want to deal with the ordinary people who are finding it terribly easy to find illegal material. It is as if every street was lined with stalls selling counterfeit goods. If we can just take them off, yes, new ones will pop up, but they take time to get known and, when they are known, you knock them off. If you go in this direction with Clause 18, you deal with the bulk of the business.
	Certainly in that way we begin to answer the questions raised by the noble Lord, Lord Triesman, in Committee, about people who are streaming football matches straight after the game or maybe during the game. These people have identifiable sites. People know where to go. You knock them on the head. Sure, a few will pop up elsewhere but, before they can do any damage, they become big enough to notice and you sit on them again. That seems to me the sensible approach.
	We will need proper protection for search engines. We will need to think carefully to what extent they can be asked to block material. I think that they will have to be asked to block material to some extent. I looked for a copy of Stephen Fry reading one of the Harry Potter stories the other day, which he does beautifully. Listening to it is a wonderful experience. When I looked for it on Google, the first three pages were occupied by illegal material. It was extremely difficult to find something that was legal. It was easy enough to identify the illegal material because it all referred to BitTorrent. It would be easy enough to drop those services from the index, as they advertise that they are illegal.
	I do not see why search engines should not be able to block these things. Taking them out of search engine results would be one of the most obvious ways of making life inconvenient and one of the easiest ways of doing so, compared with trying to block individuals' internet traffic. This will be a productive way to go. I suspect that it will require a lot more consideration than we have had time to give it, but I go back to my amendment tabled in Committee. This is where Clause 17 ought to have been heading. As has been suggested by the noble Lord, Lord Puttnam, if this gets struck from the Bill in the wash-up, we certainly ought immediately to begin discussions on how we can make a success of going down this route to deal effectively with piracy at source, rather than just prosecuting those who happen to be drinking the counterfeit rum.

Lord Triesman: My Lords, I thank the noble Lord, Lord Lucas, for his generous comments and record the fact that I agree with much of what he said. I add my voice in urging the Government again to have a discussion with the search engine companies. I know that it will not be the first time that an attempt at fruitful discussion with them has taken place. It seems a plausible argument to put to them that there are a variety of things which are illegal and undesirable in all sorts of different ways but which the technologies that they employ can open up to people. It is not beyond them to deal with that. It is certainly not beyond them to co-operate, because it is socially, let alone legally, right to co-operate. Without wishing either to hear things that the noble Lord did not intend, or to put words in his mouth, I urge that conversation to go ahead as soon as possible in light of the clause that is now in front of us.

Lord Razzall: My Lords, when the Minister responds, it would be worth him answering the question asked by the noble Lord, Lord Puttnam, although he is no longer in his place. Why are the ISPs so exercised about such issues? Why were they allowed to get into the position where this sort of thing was nothing to do with them? We debated that in Committee. As we know, the ISPs are strongly against this amendment because they have traditionally taken the view that they are like the Royal Mail. When you send a letter through the Post Office and the Royal Mail delivers it, nobody suggests that the Royal Mail should be responsible for the content of the letter, even if it is defamatory or in breach of copyright. That is how the ISPs regard themselves. Clearly, it is a major issue to get the balance right between the ISP in the role of the Royal Mail and the ISP taking down material that is illegal or in breach of copyright. This amendment is the first time that the issue has been addressed. The Minister indicated that the ISPs take down material relating to paedophilia and illegal hard pornography, but I understand that that is only by voluntary agreement among the ISPs and that not all of them sign up to it. This is a significant step forward and it explains why the ISPs are against it.

The Earl of Erroll: My Lords, with the permission of the House, it may help if I clarify that issue, which I know a little about. It has to do with Europe and the e-commerce directive. ISPs, in acting purely as a way of accessing the internet-as a pipeline to other content-and not delivering content themselves, are mere conduits. As such, they have an exemption. It is rather like the Royal Mail not having to censor all your mail to check that you are not sending bad stuff. If the ISPs tried to check everything that passed through them, it would kill the internet. There has to be a difference between people who host content and an ISP, which is just a conduit to get to content and does not check what is going through it. There has been confusion on that throughout the Bill. I have not worried about it in the past but it may help the noble Lord, Lord Puttnam, when he reads this later.

Lord Young of Norwood Green: My Lords, I made the Government's view of this clause clear on Report. I certainly agree that we should have a way of tackling online copyright infringement that will not be susceptible to the provisions in Clauses 4 to 17, but I am afraid that this clause is not it.
	I have already outlined our primary concerns. At a purely practical level, despite the drafting in subsections (6) and (7), this is not compatible with the technical standards directive and will not be capable of being enforced. Furthermore, as the industry, public and media response over the past 10 days has made clear, this measure needs careful design if we are to avoid significant disadvantages and unforeseen and unwanted consequences to the internet and the digital economy. I reassure the noble Lord, Lord Lucas, that although I am a former employee of BT, I am not listening to the siren voices. I always enjoy listening to the noble Lord's dulcet tones. We are no longer running away from this issue but, I hope, heading in the right direction.
	As I said, there has been a lot of response in the media. I acknowledge that the noble Lords who proposed this clause share the Government's aim of addressing online infringement of copyright, which is the intention behind this clause. Our intention as the Bill moves to another place is to try to bring forward a clause that would ultimately achieve the same effect, but one which could be enforced, by proposing a power for the Secretary of State to bring forward regulations to achieve the desired effect in relation to site blocking. This would allow for not only proper notification under the technical standards directive but also-this is important-proper consultation and consideration of the evidence for the need for and proportionality of the measure.
	This is a complex issue, as has been acknowledged even in this short debate. I thank the noble Earl, Lord Erroll, for the clarification he gave about the role of ISPs as a conduit and the fact that they cannot check everything. Given that and the fact that we do not believe that this clause as drafted could be legally enforceable, it does not help for the Government to take a view on the amendments. I do not believe that amending the clause would be particularly productive. We need instead to look at something that would work legally by giving the Secretary of State a power to bring forward regulations to achieve the desired effect, while taking into account all the points made during the House's consideration of the clause. That is a genuinely sincere commitment. This includes the need to ensure adequate protection for national security, which I am sure the whole House will agree is necessary.
	On the points made by the noble Lord, Lord Clement-Jones, we recognise that these amendments are well intentioned. It can only be a good thing for subsection (4), for example, to be removed, though I am unsure about the proposed provision on costs. I acknowledge that the noble Lords have attempted to address the harm that could be caused by copyright owners seeking to get sites blocked by threat rather than by court action but I am uncertain that these amendments deliver that intention.
	Amendments 19 and 23 seek to respond to a further concern, to which I alluded on Report, about the likely impact on the ability of our intelligence and law enforcement agencies to do their jobs properly. I am grateful to the noble Lords, Lord Howard and Lord De Mauley, for this attempt to resolve that concern. However, this amendment very much misses the point. We cannot support the notion that the Secretary of State should present evidence in relation to every injunction application when it may be possible to establish a consistent and foreseeable position. Separate consideration in relation to each application does not seem like a good use of taxpayer money, court time or, indeed, the time and money of the copyright industries, which might pursue any number of fruitless applications while waiting for a court to reach a different decision.
	I reiterate the point that I made earlier. As the Bill moves to another place, it is our intention to try to bring forward a clause that ultimately achieves the same effect. That is a sincere and constructive commitment, and I have tried to address the genuine concerns that have been expressed. I give the noble Lord, Lord Triesman, the reassurance that a conversation and dialogue would of course be required to take place.
	I think that there was one other point. Although my noble friend Lord Puttnam is not in his place at the moment, the noble Lord, Lord Razzall, rightly reminded me of the question of why ISPs are allowed to say that this has nothing to do with them. He rightly referred to the "mere conduit" defence from the e-commerce directive. In our view, ISPs are an important stakeholder and should be involved in taking this matter forward but within the e-commerce directive.
	I trust that, in the light of the assurances I have given, the noble Lord will feel able to withdraw the amendment.

Lord Clement-Jones: My Lords, first, I thank all noble Lords who have taken part in the debate and, in particular, the noble Lord, Lord Triesman, who it is nice to see again in his place in a more positive frame of mind. I also thank the noble Lord, Lord Lucas, for his very useful, rather forensic comments.
	In response to the noble Earl, Lord Erroll, I do not think that during the course of the Bill we have had confusion about the role of ISPs; I think we have all been very conscious of their limited duties. That is why, as my noble friend Lord Razzall indicated, this amendment is so controversial so far as concerns ISPs, leading to a letter in the Financial Times from quite a number of them. Let us not forget that a lot of the proponents in this are in business. Of course, many copyright owners are businesses-some large and some small, such as photographers-but some on the ISP side are also very large businesses, so this is not simply a case of big business against the small person. That has needed to be emphasised in this debate.
	I thank the Minister, in particular, for his reply. Of course, there is many a slip between cup and lip, and the debate will now move to the other place. I take it from the Minister-and hope that this is the case-that this is not a reintroduction of Clause 17 but a much more targeted approach to consulting over regulations with a specific target.
	In view of the controversial nature of the proposals that we tabled on Report, which I more than discovered in the reaction of members of my own party, I hope that, when drawing up the new regulations, Ministers will be very keen to observe one or two points. Perhaps the Minister will find these reasonably useful, certainly as regards the available research. I hope that the regulations will be very rooted in the evidence of copyright infringement and of the amount of downloading that takes place from the prevalent overseas websites.
	I also hope that, when they consult, the Minister and his colleagues will respond to the concerns of those who believe that site-blocking is a serious step, both technically and legally. I welcome his undertaking to have an extensive consultation on the regulations. However, it is incumbent on those who are absolutely dead-set against this kind of measure to demonstrate just how these new models can be set up unless there is adequate protection against copyright infringement. I think that we have debated that matter throughout the past three months but the noble Lord, Lord Whitty, is clearly unconvinced that some incentive, apart from pure education, is needed to persuade people to download legally. I think that we need to be fairly clear on that score as well.
	I also hope that the Minister will make sure, when the Government consult, that the safeguards which we have tried to build into this clause-both in the original amendment and in these ones-will very much be reflected in the regulations in order to make sure that the operation of any web-blocking mechanism is proportionately applied. Most importantly, we on these Benches have had many representations from all sides of the argument that there should be a full and proper consultation period. I hope that this will not be just a quickie in the course of the next few months but that all stakeholders will be consulted. I accept that as a criticism of the amendments which we put forward from these Benches and I hope that the Government do not make the same mistake. I beg leave to withdraw the amendment.
	Amendment 14 withdrawn.
	Amendment 15
	 Moved by The Earl of Erroll
	15: Clause 18, page 22, line 20, at end insert "and, in the case of online search service providers, the extent to which inclusion of, or access to, copyright infringing content is incidental to the main purpose of the search service,"

The Earl of Erroll: My Lords, I beg to move my Amendment 15, although I suspect that is a bit redundant after what I have just heard from the Minister. I need first to declare that I have a tiny interest in a search engine start-up that is for business purposes. It is not a rival to Google-it is not intended to be-and it is not worth a lot of money, but I have an association with search engines. Perhaps I may point out quickly that I agree with the noble Lord, Lord Clement-Jones. This is not one-sided-it is big business versus big business. Small business is not getting a look-in in this Bill at all. That is the problem which I, the noble Lord, Lord Whitty, and some others have with it.
	My concern about the new clause-perhaps I may say this before moving straight on to Amendment 15, which encapsulates a principle, and I would like to know whether the Minister intends to incorporate this principle into whatever the Government are proposing-is that it will not be subject to any amendment, or discussion and then amendment, by either House. It will be inserted somehow between leaving this House and arriving at another place. Presumably it will be discussed on Second Reading there. I presume that it will then be dealt with during the wash-up. We have no idea what it looks like, and it seems to be an abuse of parliamentary process. I think that that is what I was hearing.

Lord Maxton: I may be wrong, but I thought that the convention on wash-up is that there has to be a Second Reading and one Committee stage on a Bill before it can be dealt with in the wash-up. Others may be able to give a better explanation of the position but I believe that that is the case.

Lord Davies of Oldham: My Lords, we are in somewhat deep waters here. However, if Second Reading follows on after one House has completed all stages, then the issues would be considered.

Lord Gordon of Strathblane: In that case, following my noble friend Lord Maxton, what mechanism do the Government have for introducing new material into the Bill? I appreciate that I am asking this question of the noble Earl, Lord Erroll, when it should probably be directed to the Government.

The Earl of Erroll: It might benefit the House if that question were dealt with. Perhaps I should first make my point on Amendment 15, which the Minister can deal with quite easily.
	I asked for Amendment 15 and my other three amendments to be degrouped from the others-the noble Lord, Lord Lucas, has already spoken to my grouping-because I wanted them to be taken as a specifically different point. The point is slightly different and the amendments are very specific and targeted. There is a challenge for search engines. It became apparent after new Clause 18 was inserted into the Bill that most of the large search engines were worried they would be caught by it. This arose from the words,
	"to prevent copyright infringement content"-
	which is not really grammatically correct-
	"being accessed at or via that online location".
	They were automatically caught by that. It does not really matter what the Minister may say-there is nothing there about producing regulations to define things more tightly; it is for the courts to decide later. It therefore seems important for this House to state whether or not we intend that general purpose, bona fide search engines should be caught by the clause. If they are to be caught, so be it, but it will affect Britain's ability to take part in a global economy.
	I tried to produce something that would do with a lawyer who kindly volunteered his services pro bono. It was an extremely difficult task to perform at short notice, but we tried to do it by inserting two references that go back to the Electronic Commerce (EC Directive) Regulations 2002, which largely deal with the issue. I also put in a bit that says,
	"in the case of online search providers, the extent to which inclusion of, or access to, copyright infringing content is incidental to the main purpose of the search service".
	In other words, anything that was deliberately intended for the purpose of giving indirect access to copyright-infringing material would be caught. That is not excepted by this. The provision is supposed to exempt only the main search engines.
	Many people want to know what the House intended. Did it intend to cause problems for large search engines, or are these being caught inadvertently? It is difficult to define the boundary between them and a site which provides access to an indirect route or to an index of a whole load of copyright-infringing sites. The Government need to specify the provision far more tightly than they have done in their amendment. Will the Government be giving us a provision that neither House of Parliament can consider and amend? It would be useful if the Minister gave us a statement on the Government's attitude to search engines. I suggest that they should use the super-affirmative procedure, as proposed in Clause 17, if they intend to come back with a provision that will be active after the general election but which we will not have debated properly. I beg to move.

Lord Lucas: My Lords, I agree with the noble Earl that it is important to deal with the position of search engines, which are not directly addressed by Clause 18. Google is very good at blocking access to sites; it just relegates them to page 256. If it does not like something that comes up it just disappears in the rankings. There are mechanisms commonly used by search engines to make it inconvenient for people to find content that Google does not approve of.
	To go back to what the noble Lord, Lord Puttnam, said, it is a question of taking ISPs and search engines and joining them in, so as not to let them think that in some way they are isolated and can act all on their own without any thought of how they fit into the mesh of copyright-the melding of the interests of the consumer and the producer that lies at the heart of it. All the players have a part and we should protect what search engines do assiduously. We must be careful not to start acting like the Chinese Government. On the other hand, as I am sure that they will not, they should not think that they can stand completely aside and act with complete freedom as if they do not have a role in how copyright is protected on the net.

Lord Young of Norwood Green: My Lords, I have already reminded the House of the Government's concerns on the legal status of Clause 18 and the lack of transparency and accountability with which it has been inserted into the Bill, and I have indicated our intention to bring forward a revised provision to deal with these problems. The usual channels will be dealing with that in the wash-up, when it has to be done by agreement. I also reassure the noble Earl, Lord Erroll, that we will ensure that the government amendment is compatible with the e-commerce directive.
	These amendments seek to respond to a further concern: the need to ensure that search engines are not inadvertently affected by the measures proposed in this clause. The amendments highlighted potential risks that the service and public benefit offered by search engines may be at risk if, in the course of providing search results, they happen to inadvertently feature copyright-infringing material. The amendments proposed by the noble Earl, Lord Erroll, rightly address important points. Moreover, they underscore my initial point that this is a measure that needs careful design.
	Again, a power for the Secretary of State to bring forward regulations to achieve the desired affect would allow for the full consultation, analysis and consideration necessary to ensure that we avoid these and other potential unintended side-effects or consequences. As I said in relation to the previous group of amendments, given that we do not believe that this clause as drafted could be legally enforceable, amending it is not particularly productive. In light of these comments and the assurances that I have given, I hope that the noble Earl withdraws his amendment.

The Earl of Erroll: I thank the Minister for those assurances. They go a long way to assuaging the fears of a huge swathe of the internet industry about what, as the Minister said, could come about as the result of the law of unintended consequences. The only thing that he did not answer that fascinates me is-what procedure is there for inserting or changing this legislation from now on? I am not quite sure how that can be done.

Lord Young of Norwood Green: I answered that. However, the noble Earl is clearly as unfamiliar with the procedure as, I confess, I am. Nevertheless, I am reliably informed that the usual channels will see the proposed new clause and that an amended clause will then be dealt with in the wash-up. I cannot give any more details. My noble friend the Deputy Chief Whip is nodding in the affirmative. I rest on the assurance that we intend to do this. It is a viable way forward.

Lord Clement-Jones: I am sorry to interrupt the Minister. He assumes, therefore, that the wash-up will take place at the very beginning of April. However, there may not be a general election until June.

Viscount Bridgeman: Will the wash-up take place in the other place or in this House?

Lord Young of Norwood Green: The other place.

The Earl of Erroll: I am in a difficult position. I am delighted that the Minister realises the shortcomings of this clause; that it has replaced the previous Clause 17, which I did not like either; and that, therefore, something better will appear. On the other hand, the method by which it is appearing is by a complete and absolute abuse of parliamentary process.
	I am not quite sure why we bother to sit and debate any laws at all if the Front Benches in another place can get together and put whatever they like into a bit of legislation. That is for another time and another place. I have always found the whole area of wash-up very troublesome, particularly as a Cross-Bencher who does not get a look-in at all. I have seen some very funny things going through. When I see two Front Benches colluding, I usually think that we are in trouble.
	With all those caveats, I welcome the Minister's movement on this clause. I hope that what they propose will look good. I hope that he has listened to what I said about the super-affirmative procedure and that they would insert something like that so that we could have proper parliamentary scrutiny. I beg leave to withdraw the amendment.
	Amendment 15 withdrawn.
	Amendments 16 to 23 not moved.
	Clause 20 : Appointment of manager of internet domain registry
	Amendment 24
	 Moved by Lord Davies of Oldham
	24: Clause 20, page 26, line 16, leave out "any" and insert "one or more"

Lord Davies of Oldham: The Government accepted an amendment tabled in Committee by the noble Earl, Lord Erroll, when he sought to ensure that all the directors of a registry were not unnecessarily replaced by the manager. We agree that some directors might be on the side of the manager and that therefore it would be useful to retain their expertise, which is the burden of the noble Earl's contribution and amendment.
	On reflection, we agree that the current text is unclear and could be read as meaning that we would replace either one director or the whole board. Therefore, we have tabled this small amendment merely to clarify the fact that the manager could retain the expertise of one or more directors if he so chooses. I beg to move.

The Earl of Erroll: My Lords, I added my name to this amendment, which shows perfectly what Third Reading is for. I was delighted that the Government accepted my amendment at the previous stage and saw that in principle it was good. But, quite rightly, they have spotted that it could be improved. With that, I am delighted to welcome the improvement and I thank the Minister for moving it in such a kind way.
	Amendment 24 agreed.
	Clause 39 : Payment for licences
	Amendment 25
	 Moved by The Earl of Erroll
	25: Clause 39, page 46, line 35, after "licence" insert-
	"(i)"

The Earl of Erroll: My Lords, unfortunately, I have left my notes on this amendment downstairs because I was in rather a rush. From what I remember, it concerns a mismatch as regards spectrum and the spectrum cap. Spectrum released under the spectrum cap can be paid for in certain ways, but spectrum can also be divested voluntarily or under another arrangement. I sent a note to the Minister and the Bill team about this. There seems to be a mismatch between the two. In proposing these amendments, I am trying to be helpful and I hope that the two things will be brought into line. It would tidy up something which could otherwise be a block to the reallocation of spectrum in a sensible way. I beg to move.

Lord Davies of Oldham: My Lords, I am grateful to the noble Earl, Lord Erroll, for being more explicit in the note which he delivered to the department than he has been in proposing the amendment. We know exactly the point at which he is driving, although we are going to ask him to withdraw his amendment. I hope that he will listen carefully to the reasons why, because we have given it the fullest consideration.
	Included in the Government's spectrum proposals, now before Parliament, are temporary spectrum caps that apply to the planned combined auction of 800 megahertz and 2.6 gigahertz spectrum. These caps are designed to ensure that the acquisition of valuable spectrum is spread more equitably between existing operators and new entrants. In certain circumstances, operators may therefore have to release existing spectrum to be able to bid in the combined auction. In those circumstances, costs will be incurred by the releasing operator in clearing their released spectrum. To offset these costs, it is proposed that additional payments are made by any operator acquiring this relinquished spectrum to the operator releasing it.
	At present, this additional payment relates only to spectrum released in order to stay within the limits of the caps. However, these amendments would extend that payment to any spectrum released into the combined auction. In particular, it would potentially include spectrum being released by T-Mobile and Orange, required by the European Commission as one of the conditions necessary to gain its approval for the joint venture.
	In effect, these amendments would allow the joint venture to receive a payment from another operator to subsidise the cost of its obligations to the European Commission, which we do not consider to be reasonable. The two companies involved are likely to benefit considerably from the joint venture. Indeed, they would scarcely have thought about it and have embarked upon the venture if that were not the case. But there are costs associated with the joint venture and in obtaining the approval of the Commission it is only right that those costs are borne by the operators concerned and not by any other operator which will not benefit from the venture. That is why the Government have taken the position that they have. I hope that the noble Earl will feel that that is reasonable and that he can safely withdraw his amendment.

The Earl of Erroll: My Lords, I thank the Minister for that extremely informative and useful reply. I now understand that this is quite a complex issue, and as usual it is like an onion-there are layers within layers. I fully understand the Government's reasoning. I beg leave to withdraw the amendment.
	Amendment 25 withdrawn.
	Amendment 26 not moved.
	Clause 43 : Extension and regulation of licensing of copyright and performers' rights
	Amendment 27
	 Moved by Lord Davies of Oldham
	27: Clause 43, page 52, line 14, leave out "(within the meaning of section 116)"

Lord Davies of Oldham: My Lords, this group of clarifying amendments is intended to tidy up drafting and correct unintended errors in this clause.
	Amendment 27 has been inserted because "copyright licence" is now defined for new Section 116B by Amendment 31. The wording deleted by this amendment is therefore superfluous. Amendment 35 makes a corresponding change to performers' rights. Amendment 32 inserts the words "by regulations" with the effect that the requirement to adopt codes of practice will indeed be by regulations. Amendment 39 removes the words "in accordance with regulations", this is to ensure consistency with the definition of orphan works in new Section 116C of the Copyright, Designs and Patents Act 1988. Amendment 40 has been tabled so that the sources searched to determine whether a performer's property right is orphan are sources which are likely to have details which can help trace the ownership of these rights. Amendment 41 corrects an error-the provision is dealing with performers' rights and not copyright works, so the reference here should be to "recordings" and not to "works", the amendment makes that necessary corrective change.
	The substitution of "copyright owner" with "copyright interest" in Amendment 42 is again necessary because the provision is dealing with performers' rights and not copyright. Amendment 43 corrects a cross-reference. Amendment 33 applies the definition of "member" inserted by Amendment 31 to Schedule A1 to the copyright Act and finally Amendment 44 applies the definition of "member" in Schedule 2A to the Copyright Act where Schedule A1 applies for the purpose of paragraphs 1A to 1D of that schedule.
	It will have been deduced by the House that these are technical and necessary amendments and I beg to move.

Lord Clement-Jones: My Lords, I briefly rise to recognise that these are drafting amendments. I very much hope that the Government's mind is still not completely closed under Clause 43 generally, and I mean in respect to the orphan works provisions. Clearly, there are issues which photographers are still very cognisant of. It would not be in order for me to put down amendments again on that area but I hope the Government will consider this in another place.

Lord Davies of Oldham: That is a good try by the noble Lord. Here I am dealing with technical amendments and there he is opening up the whole operation of wash-up. Let us be clear about wash-up-and I hear what the noble Earl, Lord Erroll, said just a few moments ago. I cannot really help him about the extent to which he, as a Cross-Bencher in the upper House, is able to influence the democratic will that will be largely exercised, he will not be surprised to hear, at the other end.
	It is the case that there will be clarification of these issues and full debate, we trust, on Second Reading. If the noble Lord, Lord Clement-Jones, has got his way and the election is in June-of course, he might well be right- then we will have a great deal more time in the Commons for more stages of this Bill to be considered. If we assume, however, that we do not have too much time and that there may only be a Second Reading, of course the consequences of the deliberations through the usual channels with regard to wash-up will still need to be considered by both Houses.
	The noble Earl, Lord Erroll, will fully understand that in those circumstances what will go forward is an agreed position between the parties and that therefore the obvious expectation will be that the process in the Chambers will be a relatively straightforward exercise. That is the concept of wash-up. I only say to the noble Earl, Lord Erroll, he might not like it but the alternative is that every Bill that has not completed all its processes would utterly and totally fall. I am quite sure he would regard that alternative as even more unacceptable than the concept of wash-up.
	Amendment 27 agreed.
	Amendment 28
	 Moved by Lord Young of Norwood Green
	28: Clause 43, page 52, line 21, at end insert-
	"( ) The regulations must provide for the factors to be taken into account in deciding whether to authorise a licensing body to grant copyright licences in respect of works to include-
	(a) the likely effect of the authorisation on-
	(i) authors of the works,
	(ii) members of the body,
	(iii) copyright owners on whose behalf the licensing body would be entitled to act pursuant to the authorisation, and
	(iv) licensees and potential licensees of the aspects of copyright that would be the subject of the authorisation, and
	(b) the extent to which the licensing body is entitled to negotiate or grant copyright licences in respect of similar works, other than under an authorisation under this section."

Lord Young of Norwood Green: My Lords, during our debate on Report, I agreed that the Government would consider Amendments 155A and 155B tabled by the noble Viscount, Lord Bridgeman. The Government had always intended that extended licensing schemes should be run by representative licensing bodies. While we were not able to accept the drafting of the amendments tabled on Report for reasons I will explain, the government amendments in this group achieve a similar effect.
	Together, this group of amendments prescribes that the regulations must require that certain factors are taken into account before a licensing body's application to carry on extended licensing is granted. These factors are, first, the likely effect of the authorisation on authors, rights holders, licensees, potential licensees and members of the licensing body applying for authorisation. This list is not exhaustive. The amendment will ensure that the interests of all those potentially affected by an authorisation under proposed new Section 116B of the Copyright, Designs and Patents Act 1988 will be properly considered before a decision to authorise is taken. I hope noble Lords will agree that this achieves the purpose of that Amendment 155A.
	Paragraph (b) of Amendment 28 requires consideration of the extent of the applicant licensing body's existing repertoire before any extension is allowed through authorisation under proposed new Section 116B. This would require consideration of the extent to which the body was already acting for the copyright owner-that is, the extent to which it is representative of copyright owners in that class of works. It is designed to tackle the same ground as did Amendment 155B. There are corresponding amendments for performers' rights.
	In exploring the amendments proposed by the noble Viscount, Lord Bridgeman, we encountered difficulties in having the requirement for the agreement of the majority of copyright owners in the Bill. There is no constant from which a majority can be defined as the number of works protected by copyright-and, therefore, the number of copyright owners-is constantly changing. The concept is also uncertain. We are doubtful that a simple majority would be in all cases equivalent to the critical mass of representation which the Government envisage would be required to extend a repertoire. We encountered the same problem with the concept of "substantial" in relation to Amendment 155B-this also applies to today's Amendments 29 and 37-that is, its application is unclear.
	Amendment 30 requires the Secretary of State to be satisfied on a number of things in relation to any licensing body applying for an authorisation to carry on extended licensing. The government amendments already require the Secretary of State to consider the representativeness of a licensing body before granting an authorisation. There is also now a requirement for prior consultation on the criteria for authorisation in proposed new Section 116F(4) of the copyright Act. There is equivalent provision for performers' rights.
	The government amendments also require the interests of member and non-member rights holders affected by an application for extended licensing to be taken into account before the application is granted. This may be achieved through consultation.
	On fiduciary duties, licensing bodies are generally given mandates by their members. It follows, therefore, that they should already be acting in the interests of their members. The Government would certainly expect any well-run licensing body to be doing so. Where this is not the case, the Secretary of State can require a licensing body to adopt a code of practice. I hope that in the light of this explanation the noble Lords, Lord Razzall and Lord Clement-Jones, and the noble Viscount, Lord Bridgeman, will not move their amendments.
	We have managed to find a workable solution which addresses the issues raised on Report in Amendments 155A and 155B, and those raised in Amendments 29, 30 and 37 today. I can assure the House that we absolutely agree that extended licensing should not be available in an area if it goes against the wishes of rights holders in that area. I hope that on consideration of the government amendments tabled today your Lordships will agree that we have managed to capture the spirit and effect of the amendments proposed by the noble Viscount, Lord Bridgeman. I beg to move.
	Amendment 29 (to Amendment 28)
	 Moved by Lord Clement-Jones
	29: Clause 43, line 2, leave out from "provide" to end of line 14 and insert "that no extended licence under a scheme authorised by subsection (1) shall be granted if a substantial proportion of copyright owners and of authors affected by such a licence object to it."

Lord Clement-Jones: My Lords, it is always slightly disconcerting to get an answer before you have asked the question, but I shall do my best to respond on the hoof to the Minister's statements. I took my basic text-I do not think that he has deviated very strongly from it-from his letter to the noble Viscount, Lord Bridgeman, of 11 March. I think that the Minister was exercised by the phrase "the majority of copyright owners". He raised a number of points in the letter that were similar to what he has said today as regards authors not always being copyright owners but perhaps having an interest in the outcome of an application for extended licensing and the Government not believing that a simple majority would be equivalent to the critical mass of representation required. He said that including the concept of the majority of copyright owners in the Bill would not be right and that he had encountered the same problem regarding the concept of "substantial" in relation to Amendment 155B.
	I understand some of those issues. However, the amendments that the Minister has put down may be similar in effect-the Minister used that phrase-but are not the same. In particular, the phrase,
	"factors to be taken into account in deciding whether to authorise a licensing body to grant copyright licences"
	is somewhat vague. Does it specify only factors to be taken into account before authorising a body to grant licences, or does it require consultation before an already authorised body grants a particular licence to a particular user? Certainly, many of those affected by these extended licences believe that both are required.
	We disagree about the legal impact of "substantial proportion" in Amendments 29 and 37. Contrary to what the Minister thinks, we believe that these give clear instructions to the drafters of the regulations. For instance, in the context of the Copyright, Designs and Patents Act, "substantial proportion" has a clear meaning-for example, through judicial interpretation of Section 16. Therefore, we have a drafting legal issue but the more substantive point is that we do not believe that the government amendment fits the bill. I beg to move.

Viscount Bridgeman: My Lords, I again declare an interest as a non-executive director of the Bridgeman Art Library, a photographic archive. I am most grateful to the Minister for his very comprehensive letter to me, to which the noble Lord, Lord Clement-Jones, referred. I join with the noble Lord in feeling that the Government's amendment does not entirely fulfil their undertaking. There is too big an element of consultation and not enough of mandatory provision in it. Amendment 30, in my name, addresses the consent of authors, performers and licensees to each licence granted. This is an area in which the government amendment is seriously deficient. I hope that the Minister will be able to reassure me on that point. It is not sufficient to rely-as the government amendment does-on consultation at the stage when a body seeks authorisation because, from the point of view of a copyright owner, an individual author or performer or of a person holding an exclusive licence in a work, the effects of an extended licence being granted to different licensees can differ. I borrow an analogy from the film industry. It is one thing for an authorised body to negotiate and grant a licence to, for example, the British Film Institute. However, the Minister's letter explaining the Government's amendment appears to suggest that it would be all right to issue the same licence to, for example, Odeon Cinemas. The views of authors, performers and other rights holders would very likely differ on that point and should be taken into consideration when granting each licence.
	Having said that, this group of amendments addresses a point with which I am sure the House is basically in agreement. I hope that the Minister will be able to reassure me on the points that I have raised.

Lord Howarth of Newport: I welcome government Amendment 28, which is the Government's response to the important points powerfully put forward in Committee by the noble Viscount, Lord Bridgeman, and the Liberal Democrat Front Benches. It is clear that the Government's proposition in the amendment does not command complete assent from the other side of the House, but it none the less represents an advance.
	This is an instance of the excellent quality of scrutiny that the Digital Economy Bill has received in your Lordships' House. I expect that, in a very few minutes, we shall send it to another place, but I do not have the same confidence that it will receive the same quality of scrutiny in the House of Commons; indeed, my noble friend Lord Davies just now anticipated that it was improbable that the Digital Economy Bill would proceed beyond Second Reading there.
	I was startled by what my noble friends Lord Young and Lord Davies said about the wash-up, those negotiations between the Front Benches of the parties in the dying days of a Parliament before it is dissolved. I would like at least substantial elements of the Bill to go through on to the statute book, in particular Clause 43 as amended by the Government. We must contemplate the possibility that the view will be taken, as at the end of previous Parliaments, that measures contained in Bills which have not received a Committee stage in both Houses of Parliament should not be permitted to go forward on to the statute book. I would from the point of view of the need for this legislation be sorry if that were to happen, although I also recognise that there are important constitutional arguments as to why it should.
	In the event that elements of the Bill that we want to see go forward and become law do not do so at the end of this Parliament, will my noble friend Lord Young instruct his officials to make the best progress that they can in the period following dissolution in continuing to refine the Bill, and in particular to draft the regulations that would eventually be published under the Bill so that they can be put out to consultation as soon as possible? We could then look forward to a new and improved digital economy Bill being published early in the first Session of the new Parliament-I do not think that there is any significant party political controversy in relation to it. All the interests affected would be able to have their concerns and views carefully considered in the consultation on the regulations. When the new Bill was introduced in the first Session, Parliament would be able to examine it with a great deal more assurance than has been the case this time around. We would look forward to the prospect of it relatively speedily and uncontroversially getting on to the statute book. It may be that the major parts of the Bill will go forward on to the statute book, but we should at least contemplate the possibility that they will not.

Lord Young of Norwood Green: My Lords, we believe that the government amendments address a number of the concerns raised by the noble Lord, Lord Clement-Jones, and the noble Viscount, Lord Bridgeman. The Secretary of State will be required to consider the likely effect of an authorisation on a number of groups, including authors, members of licensing bodies, copyright owners, and licensees and potential licensees before making a decision on whether to grant an authorisation for extended licensing. The Secretary of State will also have to consider the extent to which the body already represents rights holders in the sector for which it is seeking an authorisation. We may not have addressed every dot and comma of noble Lords' concerns, but we have tried to respond to them genuinely, and I am reliably informed that the consultation on which the noble Lord, Lord Clement-Jones, sought an assurance will take place.
	On the point made by my noble friend Lord Howarth, we believe that we will be able to achieve the progress of the Bill. I do not want to hypothesise about a range of issues. To clarify the wash-up situation, I have been advised by someone very experienced that the Bill goes through all the stages-it is just in a telescoped manner. I cannot really say any more on that. I hope that in the light of the assurances I have given, and the Government's amendments, the noble Lords will feel able to withdraw their amendment.

Lord Clement-Jones: What the Minister had to say was very interesting. I understand that the points we make will be heard, if you like, on consultation and I hope that they will be very much part of the Government's thinking when they consult. On that basis, I beg leave to withdraw the amendment.
	Amendment 29 (to Amendment 28) withdrawn.
	Amendment 28 agreed.
	Amendment 30
	 Tabled by Viscount Bridgeman
	30: Clause 43, page 52, line 21, at end insert-
	"( ) When exercising the powers under this section, the Secretary of State must be satisfied that-
	(a) the licensing body is representative of authors, performers and rightsholders, as appropriate, of the type of works or recordings for which the licence is to be granted;
	(b) the licensing body has a fiduciary duty to the authors, performers and rightsholders on whose behalf it issues licences;
	(c) the licensing body has solicited views through an open consultation with authors, performers and rightsholders who are not members of the licensing body but would be affected by such a licence and has taken account of such views; and
	(d) the licensing body seeking authorisation has the approval of its membership, through its governing body."

Viscount Bridgeman: I would like to add to the question of substantial. When the Minister is engaged in further refining this Bill, I suggest that this is carefully examined. It appears that the noble Lord, Lord Clement-Jones, and I have both received advice that Section 16 of the copyright Act is a valid test of proportionality. With that request, I shall not move the amendment.
	Amendment 30 not moved.
	Amendment 31
	 Moved by Lord Young of Norwood Green
	31: Clause 43, page 52, line 24, at end insert-
	"( ) In this section-
	"copyright licence" has the same meaning as in section 116;
	"member", in relation to a licensing body, means -
	(a) a copyright owner on whose behalf the body is authorised to negotiate or grant licences, other than under an authorisation under this section, and
	(b) a person other than the copyright owner who is or would be entitled to royalties or other sums paid in respect of a copyright licence granted by the body."
	Amendment 31 agreed.
	Schedule 2: Licensing of copyright and performers' property rights
	Amendments 32 and 33
	 Moved by Lord Young of Norwood Green
	32: Schedule 2, page 63, line 1, at beginning insert "by regulations"
	33: Schedule 2, page 63, line 42, at end insert-
	"(3) In this paragraph "member", in relation to a licensing body, has the same meaning as in section 116B."
	Amendments 32 and 33 agreed.
	Amendment 34
	 Moved by Viscount Bridgeman
	34: Schedule 2, page 63, line 42, at end insert-
	"(3) Regulations under paragraph 1 must provide for such a code equally to apply to licensees, including provisions relating to their obligations to licensing bodies."

Viscount Bridgeman: My Lords, the Digital Economy Bill contains detailed provisions of a code of practice for licensed bodies. As currently drafted, it only provides obligations for a licensing body without any reference to licensees. Collective licensing is a commercial relationship between the licensing body and licensees. Given the nature of the relationship, obligations of the licensing body to licensees should be reflected by respective obligations of licensees to the licensing body, such as respecting the rights of creators, performers and rights holders and in particular, the right to receive fair payment for the use and exploitation of copyright material. Any code of practice should also oblige licensees to adhere to the terms of the licence and more broadly the provisions of the Copyright, Designs and Patents Act 1988 and other applicable legislation or other binding legal requirements as established by case law, conditions or guidelines. In other words, it is a two-way process. I beg to move.

Lord Howard of Rising: I support my noble friend. It would be quite illogical for conditions to be imposed on one level of the chain and for those conditions not to pass through to the next one. Otherwise you could license somebody, put conditions on that licence and the next person down could simply ignore them. I hope that the Minister will therefore listen to my noble friend's suggestion.

Lord Young of Norwood Green: My Lords, the purpose of the amendment is to apply a licensing body's obligations under a code of practice to those that it licences. This amendment misunderstands the purpose of the code of practice. Licensing bodies are natural monopolies; licensees are frequently individuals, small or micro businesses or sole traders, who lack bargaining power. The code of practice is designed to achieve a level playing field for licensing and to facilitate dispute resolution. When a licensee breaches obligations in its licence and infringes copyright, the licensing body has a right of action which it can pursue. It would be unusual for a customer buying a product-in this case, the licence-to be subject to regulatory requirements that are designed for its supplier. In the light of this explanation, I hope that the noble Viscount feels able to withdraw his amendment.

Viscount Bridgeman: I beg leave to withdraw the amendment.
	Amendment 34 withdrawn.
	Amendment 35
	 Moved by Lord Young of Norwood Green
	35: Schedule 2, page 65, line 25, leave out "(within the meaning of paragraph 1)"
	Amendment 35 agreed.
	Amendment 36
	 Moved by Lord Young of Norwood Green
	36: Schedule 2, page 65, line 32, at end insert-
	"( ) The regulations must provide for the factors to be taken into account in deciding whether to authorise a licensing body to grant licences in relation to a performer's property rights to include-
	(a) the likely effect of the authorisation on-
	(i) the performer,
	(ii) members of the body,
	(iii) owners of rights on whose behalf the licensing body would be entitled to act pursuant to the authorisation, and
	(iv) licensees and potential licensees of the aspects of rights that would be the subject of the authorisation, and
	(b) the extent to which the licensing body is entitled to negotiate or grant performers' property right licences in relation to similar rights, other than under an authorisation under this paragraph."
	Amendment 37 (to Amendment 36) not moved.
	Amendment 36 agreed.
	Amendments 38 to 44
	 Moved by Lord Young of Norwood Green
	38: Schedule 2, page 65, line 35, at end insert-
	"( ) In this paragraph-
	"member", in relation to a licensing body, means-
	(a) an owner of a performer's property rights on whose behalf the body is authorised to negotiate or grant licences, other than under an authorisation under this paragraph, and
	(b) a person other than the owner of a performer's property rights who is or would be entitled to royalties or other sums paid in respect of a licence in relation to the rights granted by the body;
	"performers' property right licences" has the same meaning as in paragraph 1."
	39: Schedule 2, page 65, line 37, leave out "in accordance with regulations"
	40: Schedule 2, page 66, leave out line 9 and insert-
	"( ) public funding bodies;
	( ) trade unions and trade associations;"
	41: Schedule 2, page 66, line 10, leave out "works" and insert "recordings"
	42: Schedule 2, page 66, line 23, leave out "copyright owner" and insert "owner of the interest"
	43: Schedule 2, page 67, line 24, leave out "(6)" and insert "(3)"
	44: Schedule 2, page 67, line 30, after "rights," insert-
	"( ) as if the reference in paragraph 3(3) to section 116B were a reference to paragraph 1B,"
	Amendments 38 to 44 agreed.
	A privilege amendment was made.
	Bill passed and sent to the Commons.

Child Benefit Up-rating Order 2010

Copy of the Order
	Copy of the Report

Motion to Approve

Moved By Lord Myners
	That the draft order laid before the House on 10 February be approved.
	Relevant Document: 9th Report from the Joint Committee on Statutory Instruments.

Lord Myners: In moving this Motion, I shall speak also to the Tax Credits Up-rating Regulations 2010, the Guardian's Allowance Up-rating Order 2010 and the Guardian's Allowance Up-rating (Northern Ireland) Order 2010. We shall debate the four related regulations and orders together. Tax credits, together with child benefit, deliver financial support to the vast majority of families with children in the UK and are vital in our commitment to tackle child poverty. I am pleased to introduce these regulations and orders, which increase certain elements and thresholds of tax credits and raise child benefit and guardian's allowance. In my view, the regulations and orders are compatible with the European Convention on Human Rights.
	I turn first to the Tax Credits Up-rating Regulations 2010. Tax credits play a major role in ensuring that work pays and in tackling child poverty. Overall, 6 million families containing 10 million children benefit from tax credits. These regulations increase the child element of the child tax credit by £20 above earnings indexation, which means that the child element will increase to £2,300 from April 2010. Since its introduction in April 2003, that element will have increased by £855, benefitting 7.5 million children.
	For the first time in half a century, the retail prices index decreased, which means that all rates have increased in real terms. To provide additional support to households during the early stages of this economic recovery, the Government are bringing forward by a year a proportion of the increase expected in April 2011. From April 2010, rates will be increased by 1.5 per cent for those benefits and tax credits normally uprated by RPI. In April 2011, rates will be increased by the remaining amount necessary to make up the difference, locking in the real increase that arises from the fact that prices fell. These regulations therefore increase the disabled element of the child tax credit and most of the other WTC elements by 1.5 per cent.
	I turn to the Child Benefit Up-rating Order 2010 and the guardian's allowance orders. Child benefit is payable to around 7.5 million families for 13 million children and young people, providing almost all families in the UK with a worthwhile contribution towards the cost of bringing up their children. These instruments also increase rates by 1.5 per cent. From 12 April 2010, child benefit will be worth £20.30 per week for the first child and £13.40 for each subsequent child. Guardian's allowance will increase to £14.30 per week.
	With the increases introduced by these instruments, we will be delivering even more support next year. We remain committed to the Government's goal on child poverty, of which tax credits will remain a key part. As a result of all the changes to the personal tax and benefits system since 1997, families with children in the poorest fifth of the population will be on average £5,000 a year better off. I commend these regulations and orders to the House.

Baroness Noakes: My Lords, I thank the Minister for introducing these regulations and orders, which are among the highlights of the Treasury calendar. We shall not be opposing the instruments but I have a few points for the Minister.
	As the Minister explained, these instruments, in one way or another, grant real increases in benefits and tax credits. Most but not all of the tax credits are being increased; because RPI fell in the year to last September, simply maintaining the value increases them in real terms. However, this analysis may not resonate with the average family. While prices fell in the year to last September, which is the reference period for the uprating, they are not falling at the moment. The latest year-on-year RPI figures show a 3.7 per cent rise and RPIX, which excludes mortgage payments, shows a rise of 4.6 per cent. The rate of increase is accelerating sharply, with annualised rates over a shorter period being very much higher. I would not like to be a Labour candidate, or canvassing for one, in a few weeks' time, explaining the great munificence of a 1.5 per cent increase in, say, child benefit against inflation rates perceived as very much higher than that-but that is very definitely not my problem.
	I will start with child poverty, which the Minister mentioned. The Minister and I have been spared dealing with the Child Poverty Bill and I shall not repeat all the analysis that noble Lords spent many happy hours debating in the Moses Room. One thing is now crystal clear, and even the Government cannot escape this analysis: the Government have failed to meet their 2010 target to halve child poverty. That required the numbers to fall to 1.7 million. At the last count, 2.9 million children were living in relative poverty. The statistics have been going backwards since 2004, with particularly worrying increases in the number of such children in working, as opposed to workless, households. We do not rejoice in any of this, because it is yet another problem that a new Government will have to solve.
	The Government have often used the granting of real increases in child benefit and the child element of tax credits as a way of claiming an advance in the war on child poverty. Since the 2007 Budget, the Government have been claiming that their plans would lift 500,000, or sometimes 550,000, children out of relative poverty. I read very carefully the 2009 Pre-Budget Report, in which the changes included in these instruments were first announced, but I found no claims about the impact of the PBR, either on its own or cumulatively, since the 2007 Budget on child poverty figures. Will the Minister say what impact the child benefit and child tax credit changes in the instruments before us will make on the child poverty figures? If he cannot give an up-to-date estimate of the number of children who will be in relative poverty in 2010-11, can he say what impact these instruments taken on their own will have? If he cannot give that analysis, will he say why a Government who have bragged so much about their policies to reduce child poverty cannot calibrate one of their flagship PBR announcements on tax credits in those terms?
	The other area that I want to confirm with the Minister is how these increases will be clawed back next year. The Government have made it clear that the 1.5 per cent increases will not be permanent but will be offset against the inflationary increase that they expect on the basis of the September 2010 RPI figures. Let us take the basic element of the tax credit, which is currently £1,890 and is being increased by the tax credits regulations by £30 to £1,920-an increase of just short of 1.6 per cent. When they come to the calculations based on the September 2010 RPI figures, will the Government knock that 1.6 per cent off inflation for the year to September 2010 in calculating the increase allowed for the following year's tax credits? If, for example, inflation to September 2010 is 4 per cent, will tax credit recipients get 2.4 per cent? If we translate that into the basic element of the tax credit, a claimant will get £51 extra in 2011-12 rather than the £81 that inflation would indicate for the year. If inflation slumps to 1.6 per cent-it is unlikely, but let us assume that it does-will they get nothing? It is important to be clear about this: if this is happening, it is another of the poisoned wells being left for an incoming Government.

Lord Oakeshott of Seagrove Bay: My Lords, like the noble Baroness, Lady Noakes, we broadly support these orders and regulations, but again, like her, we have one or two questions and comments.
	First, we need to recognise that the tax credits system has never worked properly. More than a third of all tax credits payments have been wrong since the system was introduced. The Government have overpaid on average 1.5 million families every year and in that time more than £16 billion has been overpaid or lost due to fraud and error. Even though most of the mistakes are made by the Government, they have dragged more than 50,000 families through the courts to draw back the money. More than half a million families, or about 1 in 10 receiving tax credits, are earning more than £40,000 a year. Does the Minister think that that is a sensible use of public money, with as desperate a deficit as we have now? Those families should not be stuck in the revolving door of complex means-tested benefits, having to claim back the taxes that they have paid. Instead, they should be paying less tax in the first place.
	The noble Baroness, Lady Noakes, also talked about the Government failing on their child poverty target. That is right, but it is a relative target. The bulk of the reason why the Government have been failing on their child poverty target is the rapid increase, over the past few years, in inequality in income and particularly wealth. How is it possible to complain about the Government missing their child poverty target while being in favour of tax breaks at the very top? For example, did the Minister notice that inheritance tax was the tax that dared not speak its name in David Cameron's 40-minute speech at the Conservative Party conference? There was no reference to it at all. Can the Minister confirm that, under the Conservative proposals, the 3,000 wealthiest estates would get a tax break of about £250,000 each-far more than the owners of family homes, for whom this is intended? As always, the tax breaks are biggest at the top, which can only make the achievement of the child poverty target much more difficult.
	I will not go through the retail prices index statistics as the noble Baroness did except to say that I am sure that the Minister will regard the past few months-as do I and almost all informed professionals, whether those who work in the City or economists-as a short-term spike in inflation. Certainly, it is nonsense to project up annualised rates from two or three months. Short-term inflation is painful, but we must be realistic. We are not at the moment in a situation where the economy has serious inflationary pressures. If anything, the risks are more on the other side.
	Can the Minister tell us more-this has been something on which I have pressed him and his predecessors-about the change in the cost of living over the past year and how he sees it developing over the next year for different income groups? In particular, how has it affected people in the lower-income bands? Does he have any statistics for the relative change in the cost of living between households without children and households with children, which is clearly of particular relevance for these benefits and for these instruments?

Lord Martin of Springburn: My Lords, forgive me, but I do not have the full paperwork in front of me. I have a question regarding the guardian's allowance. If I picked up what the Minister said correctly, it appears that the child benefit allowance is higher than the guardian's allowance. Does that put guardians at a disadvantage? Obviously, a guardian comes about because of the changed circumstances of a child-a child could be left an orphan or with parents in long-term care in hospital. Form-filling is required for the potential guardian to get the allowance. What is the normal time specification from the date of the submission of the form until payment of the guardian's allowance?

Lord Myners: My Lords, as I said in my introduction, these regulations and orders increase certain rates and thresholds and are in line with the Government's commitment to make work pay and to tackle child poverty. Tax credits provide financial support to nearly 20 million people. It is a responsive system designed to tailor financial support to reflect families' current circumstances and to respond quickly to their changing needs, particularly in difficult times when income falls or needs increase.
	From April to October last year, the flexibility of the tax credits system has given extra help worth on average £37 a week to 400,000 families whose income has fallen. Tax credits, together with child benefit, deliver support to virtually all families with children in the United Kingdom. Where in the 1980s and early 1990s the number of children in poverty more than doubled, tax credits have helped to lift around 500,000 children out of relative poverty since 1998, and the number of children in absolute low-income poverty has halved, from 3.4 million to 1.7 million. The fight against child poverty is, of course, not over and will require continued effort on behalf of government. These regulations and orders, together with other measures announced in the Budget 2007, will help to lift 550,000 out of poverty.
	The noble Baroness, Lady Noakes, asked a number of questions relating to statistics on child poverty. I do not have the statistics available but I will, with great promptness, write to her with the information that she seeks, if such information exists. I will also copy that to the noble Lords, Lord Oakeshott and Lord Martin, who have participated in this debate.
	The noble Baroness mentioned the pathway of retail prices inflation. RPI is definitely not falling at the moment, but the Bank of England, which has a good record over the past 10 or 11 years in forecasting inflation, suggests that it will fall back quite sharply as the year progresses. The noble Lord, Lord Oakeshott, referred to the current experience being a spike in inflation. I believe that that is correct. However, I am not in a position to give the noble Lord forecasts for inflation by household income or to differentiate between households with and without children. We all know that the experience of inflation for different subgroups of society will be different because of their differing expenditure plans. That is one of the reasons why it is so important in the current year that we anticipate how we think inflation will develop in accordance with the Bank of England's central projections and reflect that in some of the proposals that we are putting.

Lord Oakeshott of Seagrove Bay: I quite understand what the Minister said about forecasts. However, I would be grateful for an answer, not necessarily now, on what statistics there are on the effects over the past two or three years on different income groups. Does he feel-it is a constant worry to me-that we have enough statistics in those areas? We have seen over the past few years that there can be sharply differing statistical effects of inflation on different groups. Will he look into that and see whether we have enough statistics, particularly when deciding on these benefit upgradings in future?

Lord Myners: I am delighted to tell the noble Lord, Lord Oakeshott, that I will do that. There is a danger with the news focusing on one figure for RPI, capturing whether it has moved by one-tenth or 1 per cent during a 12-month period, to miss the fact that there will be differential experiences of inflation. We need to be alert to that particularly when it comes to issues of social policy as achieved through taxation, benefits and credits.
	We are committed to tackling child poverty and our action to date has made a significant step forward in that process. The figure that I gave-550,000 children lifted out of poverty since Budget 2007-includes the impact of the changes announced in PBR 2009.

Baroness Noakes: Can I clarify that? The Minister said 550,000 would be taken out of poverty as a result of PBR 2009. The same number was given in the previous year. Do we therefore conclude that these orders take zero children out of poverty as a result of the increases that are proposed?

Lord Myners: My recollection is that the previous figure was 500,000. However, it would be wrong for me to mislead the House. I will therefore give the noble Baroness the precise answer that she seeks when I have the absolute data close to hand in order to inform her and Parliament on this matter. Rest assured, our commitment to the progressive eradication of child poverty is undiminished.
	One cannot help, therefore, but note the observation from the noble Lord, Lord Oakeshott-who pays such close attention to these matters and regularly writes to me seeking information-about the contrast between the Conservative Party's position on issues relating to child poverty and the issue of inheritance tax. I believe that the figures given by the noble Lord were correct. The Conservative proposals, on which we now hear very little, as the noble Lord noted, would have the effect of removing 3,000 of the wealthiest families in the country from inheritance tax, with a benefit of £250,000 each. That is quite an extraordinary act of generosity, largely to the people of Kensington and Chelsea and Notting Hill. It is quite an outrageous set of priorities. I am sure that we will have many further occasions to discuss this including, possibly, in the upcoming economics debate.
	The noble Baroness asked about the impact of the proposal that any increase in prices over and above the 1.5 per cent increase from September 2009 will be reflected in the 2011 rates of tax credit. These will lock in, in real terms, the increase of the rates of tax credits and child benefit. The RPI in January 2010 is still lower than the RPI for September 2008. Bringing forward this adjustment will be taken into account when setting the limits in 12 months' time.
	The noble Lord, Lord Oakeshott, raised questions about HMRC and errors. I have information that the HMRC makes very few errors, but I have to say that it is an organisation which needs to constantly work to improve its user-friendliness and the accuracy of its processing. Many members of our population have suffered as a result of mistakes made by HMRC. I do not think anybody in HMRC should be content with its performance. I am sure that this is reflected in the urgency with which the senior management in HMRC addresses these matters. I myself have at times suffered from mistakes made by HMRC, so I fully understand the point that the noble Lord makes. Overpayments are too high. They cause great disturbance to those who receive overpayment and are then required to make adjustments, for which they have not made, or had an opportunity to make, appropriate plans. We must work hard to reduce that.
	The noble Lord also asked about tax credits to those earning over £50,000 a year. This in fact only represents 0.02% of the entitlement in 2007. The answer is that the line has to be drawn somewhere and the Government believe that it is appropriate that we provide support for those raising and caring for children. The vast majority of the benefit paid is to those on incomes below £20,000.
	The noble Lord, Lord Martin, asked about the Guardian's Allowance. My understanding is that a couple or an individual eligible for the Guardian's Allowance receives this allowance in addition to child tax credit. It is not either/or. Therefore, it is not a matter of the two necessarily being in line. Nor should one draw any great conclusion from the fact that one is higher than the other. I do not have information as to how long it takes between making the application and receiving the first payment. This is one of these dilemmas, however-we all believe that an honest and correctly completed application should lead to a fairly swift decision to start distributing payments. On the other hand, we have to have regard to the point made by the noble Lord, Lord Oakeshott, that we need to ensure that our processes are correct. There will always be a difficulty there. Some will say you are making too many mistakes, in part because you are rushing the process, on the other hand, an equally credible argument will be that an unreasonable delay can cause pain, stress and real financial distress to those entitled to the Guardian's Allowance.
	I believe I have covered the majority of the points raised in the debate. If on reading Hansard I find others, I will of course write to those who participated in the debate. I commend these regulations and orders to the House.
	Motion agreed.

Guardian's Allowance Up-rating Order 2010

Copy of the Order
	Copy of the Report

Motion to Approve

Moved By Lord Myners
	That the draft order laid before the House on 10 February be approved.
	Relevant Document: 9th Report from the Joint Committee on Statutory Instruments.
	Motion agreed.

Guardian's Allowance Up-rating (Northern Ireland) Order 2010

Copy of the Order
	Copy of the Report

Motion to Approve

Moved By Lord Myners
	That the draft order laid before the House on 10 February be approved.
	Relevant Document: 9th Report from the Joint Committee on Statutory Instruments.
	Motion agreed.

Tax Credits Up-rating Regulations 2010

Copy of the Order
	Copy of the Report

Motion to Approve

Moved By Lord Myners
	That the draft regulations laid before the House on 10 February be approved.
	Relevant Document: 9th Report from the Joint Committee on Statutory Instruments.
	Motion agreed.

Social Security (Contributions) (Amendment) Regulations 2010

Copy of the Order
	Copy of the Report

Motion to Approve

Moved By Lord Myners
	That the draft regulations laid before the House on 27 January be approved.
	Relevant document: 8th Report from the Joint Committee on Statutory Instruments.

Lord Myners: My Lords, I can confirm that in my view the provisions in the regulations are compatible with the European Convention on Human Rights.
	The national insurance contributions rates and thresholds for the 2010-11 tax year were announced at the time of the Pre-Budget Report on 9 December 2009. These regulations are necessary in order to set the class 1 national insurance contributions lower earnings limit, primary and secondary thresholds and the upper earnings limit from 6 April 2010.
	The class 1 lower earnings limit is increased from £95 to £97 per week from 6 April 2010. The lower earnings limit is legislatively linked to the level of the basic state pension and is the level of earnings at which entitlement to contributory benefit begins.
	The class 1 primary and secondary thresholds for the 2010-11 tax year will be £110 per week, the same as in 2009-10. The primary and secondary thresholds are the point at which employers and employees start to pay class 1 national insurance contributions. The primary and secondary thresholds have in past years been increased broadly in line with prices. However, as the September 2009 retail prices index was negative, we have frozen the primary and secondary thresholds at the 2009-10 levels. Had we reduced the primary and secondary thresholds to reflect the reduction in the retail prices index in September 2009, low-paid employees in particular would have had to pay more national insurance contributions, as would their employers.
	In the 2007 Budget the former Chancellor of the Exchequer announced a package of reforms to modernise the tax and benefits system. Part of the package included changes to national insurance contributions to align the upper earnings limit with the level at which the higher rate income tax becomes payable from 6 April 2009. I confirm that we will maintain that alignment for the 2010-11 tax year.
	The upper earnings limit will be £844 per week for the 2010-11 tax year. This is the same as for the 2009-10 tax year. Earnings between the primary threshold and the upper earnings limit are liable to main rate employee contributions of 11 per cent. Earnings above the upper earnings limit are subject to the additional employee rate of 1 per cent. Employers pay contributions at 12.8 per cent on all earnings above the secondary threshold.
	The Government Actuary published a report detailing the effects of both the national insurance contribution rates and thresholds announced for 2010-11 and the draft order uprating benefits laid by my right honourable friend the Secretary of State for Work and Pensions on the National Insurance Fund. The Government Actuary has confirmed that there is no expectation that the fund will need additional funding in the form of a Treasury grant for the 2010-11 tax year.
	Northern Ireland has a separate national insurance scheme from Great Britain, but the two schemes are closely co-ordinated and maintain parity of contribution rates. The draft regulations cover both Great Britain and Northern Ireland. I commend the regulations 2010 to the House.

Baroness Noakes: My Lords, I thank the Minister for introducing these regulations, which are also one of the highlights of the Treasury year. Social security contributions, otherwise known as national insurance, are a tax in all but name. They go into a rather arcane National Insurance Fund, but this is notional. The money is not held in a fund and the excess of receipts over payments each year funds the Government's expenditure. The effect of this order is that there will be an estimated surplus of receipts over expenditure of £1.4 billion. That is not a large sum in the context of borrowing £185 billion, but I imagine that every little bit helps.
	It should be noted that one of the side effects of these regulations is that the Government will benefit from a £32 million decrease in payments for contracted-out rebates. This, too, is not a large sum, but its impact is on employers with defined benefit schemes and it is yet another small nail in the coffin for those schemes. I have lost count of how many adverse changes, starting with the ACT raid in 1997, the Government have introduced to pension schemes. The latest changes to the tax effect of contributions for the higher paid will simply deprive defined benefit schemes of their last corporate supporters. It has seemed like a 13-year war on pensions in which the casualties are private sector employees, few of whom now have access to a defined benefit scheme when they change jobs or enter the workforce. Increasing numbers of defined benefit schemes are also now being closed to future accrual. When the history of this Government is written, high on the list of their dubious achievements will be the decimation of defined benefit pensions for employees in the private sector, while protecting at taxpayers' expense public sector pensions.
	These regulations for 2010-11 are a side show compared with next year's. Whether or not the thresholds and limits are tinkered with, if this Government are in power this time next year they will increase the employer and employee rates by 1 per cent. This was announced in two stages of 0.5 per cent in each of the 2008 and 2009 Pre-Budget Reports. This will be nothing more than a tax on jobs, as all employer groups have protested. It will also be seen as a tax hike by employees. If we are elected to form the next Government, we have made it clear that we will try our hardest to manage the public finances so that at least the second 0.5 per cent can be avoided. We believe that economic recovery must be built on job creation in the private sector. The Government seem not to understand that. We do not object to these regulations but we have the very greatest objections to the future direction of national insurance on which the Government plan to embark.

Lord Oakeshott of Seagrove Bay: My Lords, we do not object to these regulations either. I am sure the House will be relieved to know that I have made all the party political points that I want to this afternoon. Can I ask the Minister one simple question? Why on earth do we persist in the fiction of a separate National Insurance Fund?

Lord Myners: My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, for their contributions to this short debate and for their support-albeit, in the case of the noble Baroness, qualified support. A small number of issues were raised. In answer to the question of the noble Lord, Lord Oakeshott, I am sure that there is a good reason for maintaining the National Insurance Fund.

Lord Oakeshott of Seagrove Bay: Name it.

Lord Myners: The fact that I said I was sure there was one does not mean that I necessarily know what it is. I suspect that it might be one of those situations where dismantling the process may be more consuming of parliamentary time and taxpayer resource than maintaining the current approach. If there is an even more cunning answer to the noble Lord's question, I will write to him and send a copy to the noble Baroness.
	We do not regard the proposed increase in NIC as a tax on jobs-far from it. Our approach to jobs has been commendably strong and effective, as evidenced by unemployment being so much lower than would have been anticipated-and, indeed, than we anticipated-given the way that the economy has gone through recession over the last couple of years. We have made many efforts and taken many steps to strengthen employment prospects through various allowances and schemes specifically targeted on benefiting small and medium-sized enterprises, which are the absolute rock of the UK economy.
	The noble Baroness referred to pension schemes. The decline in defined benefit provision in the private sector is a global phenomenon which is not limited to the United Kingdom. Put simply, the world came to understand that the defined benefit promise was a more expensive one than it had anticipated-something which it came to realise in part because of changes in accounting treatment. Throughout the developed world, where the defined benefit scheme was offered by private sector employers, it is increasingly being limited to existing members and not extended to new joiners. They go into a defined contribution scheme where the employer and employee jointly share the investment risk and there is ample provision for employees to increase their contributions if they wish.
	The noble Baroness referred to a 13-year war on defined benefit pension schemes. I believe that she has in mind the steps that the Chancellor of the Exchequer took to withdraw the tax credit benefit which was being received for no good reason by pension funds. It is worth reminding the House that that was the continuation of a policy step first taken by the noble Lord, Lord Lamont of Lerwick. The Conservative Party tends to wash over that fact when addressing this subject. I am delighted that these proposals have received the support of the Tory and Liberal Benches. I commend the regulations to the House for approval.
	Motion agreed.

Financial Services Bill

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Committee (2nd Day)

Clause 2 : Proceedings of the Council
	Amendment 14
	 Moved by Baroness Noakes
	14: Clause 2, page 2, line 25, at end insert "within 14 days of the date of the meeting"

Baroness Noakes: My Lords, Amendment 14 amends Clause 2(4). I remind noble Lords that Clause 2 concerns the Council for Financial Stability. Under subsection (4), the council must publish minutes of its quarterly meetings. The Bill is silent on the timeframe in which minutes are to be published. I find the lack of a reference to a timeframe very odd. When the Government set up the Monetary Policy Committee in the Bank of England Act 1998, a clear timetable was set out. Why is this Bill silent? The draft terms of reference say that the minutes of the Council for Financial Stability should be published within one month. I have already remarked in Committee that the statement issued by the Treasury under Clause 1(5), which is how the terms of reference come into being, says whatever the Treasury wants it to say from time to time. The Treasury could change its mind before issuing the terms of reference after Royal Assent, or indeed at any subsequent time. As with the Bank of England Act, this should be in the Bill.
	That just leaves the time period that is appropriate. The Bank of England Act says that MPC minutes should be published within six weeks. Even when that Act was being passed, the practice was to do better than that. For a long time now, the Bank has routinely published the MPC's minutes 14 days after the meeting. That gives financial markets certainty about when information will be available and is sufficiently close to the actual decision to be useful to the markets. If the minutes of the Council for Financial Stability are to have any importance in the financial world, there has to be both certainty on timing and a timeframe which produces information to the markets as rapidly as possible.
	My amendment suggests that the Council for Financial Stability should stick with the timetable that the Bank of England now achieves with ease for the Monetary Policy Committee-that is, 14 days. I do not believe that the minutes of the Council for Financial Stability are any more complex than those of the MPC or that this timeframe will be particularly difficult. In addition, the MPC has nine members among whom minutes must be agreed while the Council for Financial Stability will have only three. The task of agreeing the minutes of the council will therefore be simpler and much less time-consuming. I beg to move.

Lord Davies of Oldham: I share the view that it is important that there is the discipline and predictability of a deadline in the production of minutes after a council meeting, as the noble Baroness indicated. Clause 2(4) sets out that the statement of the council should make provision for procedure. In keeping with that concept of procedure, the draft terms of reference, which are available on the Treasury website, stipulate that a final minute is to be published no later than one month after the meeting. The noble Baroness proposes to halve that time so that a final minute should be published within 14 days. If the amendment were accepted, that would be a statutory requirement. To produce minutes in such a short time seems a little dramatic. It is unnecessarily short given that it is appropriate for the minute to be agreed by the parties as a fair record. There is a bit of work to be done. Surely the predictability of the release is most important, not how rapidly it appears. We consider one month a fair and reasonable time. We hope the noble Baroness will therefore withdraw her amendment.

Baroness Noakes: The Minister has failed to explain why a period of one month is reasonable when the Bank of England can do the minutes of the Monetary Policy Committee in 14 days. As I pointed out, there are nine people there to agree minutes with rather than three. Why is a whole month needed for the Council for Financial Stability?

Lord Davies of Oldham: The difference is that the Bank of England is one entity in one building. The council meetings comprise a membership which is more diverse than that. As I said, it would not be appropriate for a minute to be issued in the name of the council without consultation having taking place on it. The difference is simply that we think we need a slightly greater time than the noble Baroness has indicated that the Bank of England takes. A month seems reasonable.

Baroness Noakes: That seems extraordinary-that the Bank of England being in one building somehow makes a difference in this day of electronic communication. Is the Minister seriously telling me that buildings are a relevant factor? The Government are not really committed to keeping up with good practice in delivering minutes. They are refusing to place this in the Bill, leaving it to the Treasury's own discretion. They are also refusing to contemplate a timeframe which is perfectly achievable in the Bank of England. I shall think about this before any later stages of the Bill. For now, I beg leave to withdraw the amendment.
	Amendment 14 withdrawn.
	Amendment 15
	 Moved by Baroness Noakes
	15: Clause 2, page 2, line 25, at end insert-
	"( ) The minutes shall record the views of each of the members of the Council and the extent to which they are in agreement."

Baroness Noakes: Amendment 15 inserts a new subsection into Clause 2. This amendment also concerns the minutes of the Council for Financial Stability, requiring them to record the views of each of the members of the council and the extent to which they are in agreement. The Government have lauded the transparency associated with the new Council for Financial Stability and this amendment merely asks the Government to put their money where their mouth is.
	The Minister will doubtless say that this should be dealt with in the terms of reference which will be issued under Clause 1(5). As the Minister knows, we are not impressed with leaving matters to this statement because in effect it leaves everything to the discretion of the Treasury from time to time, since it is for the Treasury to determine what goes in that statement. The draft terms of reference state that,
	"as necessary, minutes will attribute comments to individuals".
	Noble Lords will immediately spot the weasel words, "as necessary". Who is to say what is necessary? What criteria will be used when judging necessity? There is nothing in the Bill to insist on that.
	The terms of reference also refer to attributing comments to "individuals" not members of the council. This appears to be deliberate. The terms of reference show that, apart from the three people who are members of the council, attendance can include a deputy or senior colleague for each member, who attend even if the key players also attend; a private secretary for each member; and the secretariat. In practice, it appears that even more attend. The minutes for the first meeting of the council in January show that 11 people attended in addition to the three principles. Seven of the 11 were, perhaps unsurprisingly, from the Treasury. I could not fit most of them into the categories described in the terms of reference.
	The minutes of the first meeting of the Council for Financial Stability in January show views being attributed to many of these attendees. There is clearly no intention to confine the minutes to the council proper. It is interesting to learn that the noble Lord, Lord Myners, had a lot to say during the meeting but it is not a surprise. Yet the purpose of the minutes is to record what the members of the council said and agreed or otherwise. The Bank of England Act 1998 requires the minutes of the MPC to record the voting preference of each member. It does not require the views of individual members to be attributed. That issue has been debated from time to time. The important function of the MPC is to decide on the interest rate and, more recently, its approach to quantitative easing. It is that decision which must be in the public domain plus the balance of opinion within the MPC.
	There is a less obvious decision point as regards the Council for Financial Stability-or if there was one, it would almost certainly not be published for being market sensitive. There is a case for knowing what the views are of the top people at the Treasury, the Bank and the FSA on the issues discussed. Let us suppose, for example, that the Bank of England's financial stability review highlighted a new concentration of risks in financial markets. Are we not entitled to know what the Treasury and FSA think, or if they agreed with the Bank? That is all my amendment would require. I beg to move.

Lord Hodgson of Astley Abbotts: I rise briefly to support my noble friend. In our debate on the previous day in Committee we focused on Clause 1 and the role of the council. Various parts of the House, including the Minister, understood that there are issues about co-ordination, duplication and who is in charge. If we are to answer those clearly, and if people are to understand this matter beyond peradventure in the future, we need to know who said what about whom. I think that my noble friend's amendment goes to the heart of that issue and would do a great deal to strengthen and resolve some of our concerns about Clause 1 and the role of the council.

Lord Stewartby: My Lords, I, too, shall be brief but I should like to raise a general point. These procedures do not seem to have a great deal of pace built into them. There is plenty of opportunity for reports to be considered at the next meeting but the next quarterly meeting could be 90 days away. I get the impression that the Bill's treatment of the council's proceedings is a sort of construct in order to demonstrate to the markets and to the world outside that problems are being recognised and given due consideration. It seems to me that this is where the status of the council comes into question.
	If the council has contentious things to discuss, the minutes will become a very active ingredient in the debate about monetary policy, regulation, supervision and all such matters relating to the market. However, because the council does not have executive responsibility and apparently does not have any powers, it will be difficult to establish where its deliberations are leading in terms of action. I do not get a feel of that from reading the text of this clause but I get a general feeling that something needs to be done to sharpen things up a bit and to ensure that there is some time pressure, as proposed in the previous amendment. I think that that was a sub-plot of what we were discussing. All these very high-powered people on the council will have a sort of authority among them collectively, and indeed individually, and that level of authority is almost looking for an executive function to which to apply itself. Because the council is specifically not intended to be an executive body, we have to wonder how initiatives will be channelled into action which may be needed. I should very much appreciate the noble Lord commenting on how this looks from the Government's point of view.

Lord Higgins: My Lords, I am somewhat puzzled by the structure of this clause. My noble friend-rightly, in my view-has suggested that the views of the various members of the council be made explicit and published, and that any disagreement between them be recorded. However, I do not understand why the FSA or the Bank of England publishes a report which then has to be considered and the Treasury prepares a draft report which also has to be considered. I am not sure why there is a distinction between the two. Apparently, there is no question of the Treasury suggesting that the minutes are a risk to the stability of the economy. Having said that, I am not at all clear what the minutes will look like. Will they be like those of the Monetary Policy Committee, from which one gets a very clear idea of where the balance is on a particular issue, or will they be more like ordinary Cabinet committee minutes, which probably record nothing at all except what decision is reached and therefore will not be very illuminating? It is right for my noble friend to suggest that the views of the members of the council should be made public.

Lord Newby: My Lords, when I first saw this amendment, my inclination was to suggest to the noble Baroness that she had not gone far enough. If you want to be as prescriptive as this and are so concerned about every word that is spoken by this body, why not open it up to the public? Why not allow people to turn up to its meetings? Indeed, I think it is such an interesting body that you will be able to charge for it. By allowing the council to function in a goldfish bowl, the deficit could be reduced-at least by a small amount.
	My rather more serious point about this and all the other amendments to this clause is that today is likely to be the last day on which we debate this Bill in Committee. There may be another but certainly we will not get through the whole Bill. We know that the Conservative Party opposes this clause, as it does all the clauses in the first set, so we know that, even if any other parts of the Bill go through, the Conservatives will not allow this clause to go through in the wash-up. It is important that we get through other parts of the Bill, such as the schedule on the consumer financial education body, which we may get to, at least in part, tonight, and there are other aspects of the Bill which I think everyone in the House would like to see on the statute book. My point is that we are going into long and detailed discussions on amendments, which will not be moved to a vote or carried, to clauses which will then be struck out by the noble Baroness's party in a fortnight. Therefore, we should move on to the parts of the Bill which are of real value and which all noble Lords wish to see on the statute book.

Lord Davies of Oldham: My Lords, it goes without saying that I have some sympathy with that view but I imagine that I will have difficulty in persuading the noble Baroness and those behind her that that is the way in which we should proceed. Therefore, we are dealing with what look like minutiae.
	The Government have already indicated how they intend these issues to operate. The first shadow minute of the council in January clearly set out the different views of the attendees at the meeting, which is the basis of the concern that all noble Lords have expressed. The noble Baroness was absolutely right when she anticipated that "the Minister will say that these should be in the terms of reference". So I do. I said that in the debate on the previous amendment and I am not going to change my view with regard to this one. That is where we think these issues should be placed.
	Of course, I entirely accept her objective and the objective of all noble Lords who have spoken that the minutes should be clear about who says what. That is the real burden of the issue. I merely say to the noble Lord, Lord Stewartby, that this is not an executive body; it is a body concerned with strategy. What the individuals say in these discussions is of the greatest importance but it is not an executive body and does not have executive responsibility in quite the way that the noble Lord gave the impression of being the case.
	In terms of objectives, I do not think that there is anything at all between us. We all agree that the record of the council's meetings has to be clear and open about who contributed what and who said what so that there is a very clear perspective of the deliberations. We have already provided for that in the Bill and I do not think that the noble Baroness's amendment adds significantly to it. Therefore, I hope that she will withdraw this amendment, as she did the previous one.

Lord Higgins: My Lords, can the noble Lord clarify the point that I raised? Will the minutes record only what the FSA or the Bank of England said were dangers for the financial situation or will they include the views of the Treasury as well? In addition, why is there is a distinction between a draft report and a report?

Lord Davies of Oldham: I am sorry that I did not comment directly on the point that the noble Lord raised. That was possibly because I recoiled in horror when he suggested that the council's minutes should be like Cabinet minutes, as that would be counter to the concept of how the council is to be reported. The views of the Treasury and the Chancellor will be clear from the council's minute. It will be quite clear what the participants have said.
	There is not much between us either on the point that the noble Baroness emphasised as necessary, as if there was some kind of malign Treasury initiative to airbrush the discussion. That is not so. There is, simply, an enormous difference between a verbatim report-I hope that she is not actually canvassing that-and a report that accurately reflects and gives to the outside world a clear picture of how the participants conducted themselves at the meeting, without going to quite the point that the noble Baroness has stressed. I therefore hope that she will withdraw the amendment.

Baroness Noakes: My Lords, I start by thanking my noble friends Lord Hodgson, Lord Stewartby and Lord Higgins for their support for this amendment. The noble Lord, Lord Newby, again raised his concerns that these Committee days should be used to discuss the bits of the Bill that the noble Lord thinks are important. As he is aware, we do not yet know when Parliament will be dissolved. Until we know that, we do not have an end time and do not know how many days we will sit in Committee. There is a working assumption that this may be the last or the penultimate day in Committee, but if there is not an election in May, we could sit for many happy days in Committee on this Bill. If the Government wish to focus on clauses to which they attach real importance, it is for them to propose the deletion of other clauses. Otherwise, so far as these Benches are concerned, we will scrutinise this Bill in the normal way and not make any assumptions about an election, or otherwise.
	There is a difference of view between myself and the Minister in what he said about my amendment. The noble Lord emphasised how the minutes will record who said what and the views of the attendees, and that everything will be clear and open. My amendment is rather narrower. It says that the minutes should record what the members of the Council for Financial Stability said, not what any Tom, Dick or Harry who turned up to the meeting said. Of course, I am well aware that they are not any Tom, Dick or Harry but all fantastically important people, but the point is that the minutes do not differentiate between the members of the Council for Financial Stability, which is one of the points that I drew out in my opening remarks. However, it would not be worth pursuing that particular debate this evening, so although we may return to it later, I beg leave to withdraw.
	Amendment 15 withdrawn.
	Amendment 16
	 Moved by Baroness Noakes
	16: Clause 2, page 2, line 28, at end insert "or market sensitive"

Baroness Noakes: My Lords, I shall move Amendment 16 and speak to Amendments 18 and 24 which amend Clauses 2 and 3. These amendments are still on the theme of the minutes of the Council for Financial Stability, because it is such an interesting topic. Under Clause 2(5), the minutes of the quarterly meetings are not required to be published if one of three exceptions applies. They are: commercial confidentiality; non-interference with action by the tripartite authorities; and anything which is a threat to financial stability. We might conclude that there is enough wriggle room in those exceptions for the minutes to contain virtually nothing at all of interest, but I shall not pursue that theme.
	My concern today is with the first let-out of commercial confidentiality. I have two different concerns, which my amendments address. Amendment 16 inserts "or market sensitive" into the first exception, so that matters would not need to be included in the minutes if they were commercially confidential or market sensitive. That is, I am offering the Government an even wider exception than that drafted. I am starting from the assumption that the Government would not want the minutes to contain market-sensitive material; if I am wrong on that, doubtless the Minister will correct me. Clearly, something can be commercially confidential and not market sensitive. The two might have the same meaning on a particular matter for a large organisation, but would likely not have the same degree of correspondence for a smaller organisation.
	I was not sure whether Clause 2(5)(b) and (c) covered all the market sensitive bases either. Something that was market sensitive-in the sense that financial markets would react to the information-might not stop the tripartite authorities from acting. Similarly, something might be market sensitive but would not itself pose a threat to financial stability and come within the terms of Clause 2(5)(c). My point is that if the Government want to prevent the release of market-sensitive information in those minutes, are they absolutely sure that they have the drafting of Clause 2(5) correct?
	Amendment 18 addresses a different point; what is meant by "commercial confidentiality" in this Bill? As was pointed out in the other place, the Bill does not define commercial confidentiality-an excuse which the Government often use when there is nothing commercial or confidential at all. Anyone who has looked at responses to freedom of information requests will find how elastic the concept can be. My amendment merely requires that the council should set out what it understands by commercial confidentiality for the purposes of the permission not to include material in the council's minutes under Clause 2(5)(a) or the annual report under Clause 3(3). An alternative approach would be for the Government to add a definition to Clause 4, but that solution would be less flexible and I know how Governments always like to preserve flexibility. I have not yet mentioned Amendment 24, which is a mirror image of Amendment 16 but relates to the annual report rather than the minutes. I beg to move.

Lord Davies of Oldham: My Lords, the noble Baroness has made a good case for Amendments 16 and 24, and I propose to accept them. On Amendment 18, she pressed us on whether the Government felt secure about the issue of commercial confidentiality. I am grateful to her for that amendment and the chance to reinforce our position.
	We are cautious about the council providing, on a one-off or a continuing basis, the explanation of what it considers is meant by "commercially confidential". A very high-level explanation is unlikely to add much to what is in the Bill, while a detailed explanation risks being insufficiently comprehensive and raising the prospect that it would have to be expanded to cover specific pieces of information that are not covered by the existing one. That would not be a desirable state of affairs. In this context, the definition of "commercially confidential" is clear. Many discussions of the council will involve the position of specific firms, and much of the information, and those discussions, may well be commercially confidential and be made available to the council in that expectation.
	I accept that without a precise, on-the-record definition there is a degree of subjectivity, but we consider that to be necessary. The wriggle room provided allows some sensible judgment to be exercised, and to avoid the forced release of information that could be unhelpful to the firm concerned and therefore ultimately to wider financial stability. This is an area where it is right for the balance to be struck; I think that the noble Baroness was indicating that she understood that. We think that it needs to be struck in favour of not disclosing information, at least until we are satisfied that publishing it would not be prejudicial to any commercial interest.
	I understand the point that the noble Baroness makes about how emphatic we could be on this issue. We are asking here for some element of flexibility and wriggle room, because we cannot predict all circumstances or where the commercial confidentiality of a particular organisation might be compromised. That is why I would like her to withdraw her Amendment 18, against a background in which I hope that she will recognise the generosity of the Government's spirit in accepting the other two amendments.

Baroness Noakes: My Lords, we appear to be back to the phenomenon we experienced on our previous Committee day when the Government tried to share out; if they accepted one amendment, I had to not move another one. Here, they have accepted two, so presumably I am somehow in debt to the Government if I withdraw the one remaining in the group.
	I am grateful to the Minister for accepting Amendments 16 and 24. It is a pity that the Government have not accepted the possibility of setting down what commercially confidential means. I mentioned that those who had seen Freedom of Information Act requests would often be puzzled by the use of the commercially confidential reason for redaction. I remember one in particular, on Companies Act charges, where virtually everything had been redacted in circumstances where there was no commerciality involved because nobody else was in competition with Companies House and there was no confidentiality either. So the Government are not entirely to be trusted with the concept of commercial confidentiality. We shall see how that turns out in practice.
	Amendment 16 agreed.
	Amendment 17
	 Moved by Baroness Noakes
	17: Clause 2, page 2, line 33, at end insert-
	"for as long as the conditions in these paragraphs are met"

Baroness Noakes: My Lords, Amendment 17 would amend Clause 2(5) so that minutes of the Council for Financial Stability which are withheld on the basis of commercial confidentiality or one of the other let-outs in Subsection (5) have to be published once the reasons for the non-publication cease to exist. We completely accept, as I made clear, that there are good reasons for non-publication of minutes, although we hope that the exemption will be used sparingly. I hope that the Government do not intend that such minutes, having qualified for exemption, will then be kept secret until the 30-year rule kicks in, or whatever shorter period is used in future. If the Government believe in transparency they will support this amendment. I beg to move.

Lord Myners: My Lords, the noble Baroness has taken notice of the comments of the noble Lord, Lord Stewartby, and we are speeding up. This amendment focuses on the release of information that was initially exempt from public minuting and therefore not included in the council minutes, but which no longer meets the criteria for exemption. The amendment is neither necessary nor appropriate. It is not necessary as it would make no practical difference. As currently drafted, Clause 2(5) does not prevent the publication of information when the conditions in that clause no longer apply. The key question is what is the most appropriate vehicle for releasing information that is no longer necessary to be withheld such that it maximises transparency and public benefit in the context of a piece of legislation that is designed to further transparency. It is quite possible that a number of matters could steadily and incrementally no longer meet the exemption criteria in the months after a meeting. I do not believe, however, that a steady series of updated tweaks to the minutes is the best way to communicate the relevant information. The annual report provided for under Clause 3 provides a much more appropriate vehicle for the coherent and informative release of financial stability information regularly. The Government believe that the annual report is the appropriate place for such subsequent release, so I urge the noble Baroness to withdraw her amendment.

Baroness Noakes: My Lords, I think that I accept the Minister's point; we would not want a drip-feeding of bits of minutes as the exceptions dropped away. I can see that the annual report may well be an appropriate place for the inclusion of that material. I shall reflect further on what the Minister has said. I beg leave to withdraw the amendment.
	Amendment 17 withdrawn.
	Amendment 18 not moved.
	Amendment 19
	 Moved by Baroness Noakes
	19: Clause 2, page 2, line 34, at end insert "and must publish minutes of these meetings"

Baroness Noakes: My Lords, Amendment 19 would amend Clause 2(6). Subsection (6) allows for the Council for Financial Stability to meet additionally to its quarterly meetings. This is obviously sensible as quarterly allows a long time between meetings even in times of relative calm. If there were real financial stability issues, we would expect the council to meet more frequently. Clause 2 provides for minutes to be published only of the quarterly meetings of the council. It seems to envisage that the quarterly meetings will consider strategic issues only, as set out in subsection (1). The additional meetings allowed for under subsection (6) could be either strategic or tactical as the subsection does not constrain them at all.
	The schedule of meetings set out in the terms of reference tie the quarterly meetings to the different reports from the tripartite authorities that will be expected on a quarterly basis. But it must be possible that other strategic issues will arise outside that tidy schedule, for example some new rules from the EU or the Financial Stability Board. The draft terms of reference specifically allow for these extra meetings to cover both strategic and immediate issues. Furthermore, the draft terms of reference say that in the current financial market conditions the council will meet at least monthly. So it is puzzling to find that the clause provides for no minutes of the non-quarterly meetings to be made available, nor do the terms of reference seem to allow for this.
	This issue was debated in Committee in another place in connection with a slightly different amendment. The Minister's reply was along the lines that if the council had to give minutes for every meeting but had to remove all items of substance, that could itself be harmful. He made the distinction strongly between quarterly strategic meetings and other meetings but, as I have tried to show, the terms of reference do not confine strategic issues to the quarterly meetings, and not every item on the agenda of non-quarterly meetings, even if of an urgent nature, will need to be removed using the criteria in subsection (5) which we debated in the previous group of amendments.
	None of this makes sense except in the context of a Government who believe in only a bit of transparency but not enough to really embrace the concept. It may be that my amendment is not quite right because I can see that there could be circumstances when to announce that a meeting has taken place, even if it is a month later, but not to reveal anything about it, might be a problem. We should be able to redraft this so that the fact of a meeting, as well as its content, is capable of escaping publication using the subsection (5) let-outs. But we should not draft the Bill on the basis that everything that happens outside the quarterly meetings must be kept out of the public domain since it is clearly intended that the council will meet in addition to the quarterly meetings.
	I hope that the Government will see that their half-hearted commitment to transparency will fool no one and could harm the credibility of the Council for Financial Stability. In another place the Minister was keen to say that the council was part of creating trust in the UK's financial stability. I have to say to the Minister that partial transparency is not a hallmark of trustworthiness. I beg to move.

Lord Northbrook: My Lords, I support my noble friend's Amendment 19. It is important that if there are emergency meetings of the council the minutes should be published, especially if there are special meetings because of new rules from the EU.

Lord Myners: Amendment 19 would require any additional meetings of the council beyond the quarterly ones to be covered by published minutes. In providing greater formality and transparency the Government have struck a balance between a public benefit of greater transparency and the need to maintain confidentiality in respect of operational matters relating to specific markets or firms. The proposals for the council, in particular the provisions for additional transparency and accountability, are therefore centred on the concept of the strategic quarterly meetings.
	The Government believe that transparency over the council's forward-looking strategic discussions would be very much in the public interest. Agendas for these meetings are agreed in advance by the three participating members of the council. Therefore, it would be perfectly appropriate if one of the members of the council wished to put on the agenda something which had been covered in an intervening meeting but which they felt had strategic relevance and which should be part of the published minutes.
	The Government do not believe that it would be helpful to publicly minute all meetings. When the council needs to meet more regularly than every quarter it is likely that discussions will be dominated by operational matters that are likely to need to remain confidential. Minuting meetings that are dominated by confidential discussion would not be at all helpful. For example, publishing a minute which revealed nothing of substance could lead to damaging speculation about the stability of specific firms or markets. Such speculation may naturally be centred on firms or markets that are not in fact the subject of specific concern on the part of members of the council.
	The Government believe that transparency over the quarterly strategic discussions is much more beneficial. Hence, the distinction we make between the quarterly meetings and, when necessary, other meetings. I hope, therefore, that the noble Baroness recognises that this is a significant step forward in terms of transparency compared to previous arrangements. I urge her to withdraw her amendment.

Lord Howard of Rising: My Lord, the noble Lord finished his remarks by saying that it would be a contribution to transparency. However, Her Majesty's Government propose exactly the contrary: to have meetings outside of the quarterly meetings that will not be minuted. If that is the case, all that will happen is that, if there is something that might possibly embarrass Her Majesty's Government or which the Government do not wish to be seen for reasons other than those of commercial confidentiality, they will simply postpone those until a discussion or a meeting between the quarterly meetings.

Lord Myners: I find it almost impossible to envisage a situation in which that might be contemplated. However, if the noble Lord allows me to answer his question for the benefit of the exercise before he comes back eagerly to give the House a further question; it would require the complicity of the Governor of the Bank of England and the chairman of the Financial Services Authority. That is why such a tactic would not even be contemplated, let alone take place.

Lord Howard of Rising: I am not sure that that is correct. I believe the noble Lord has led a very sheltered life.

Baroness Noakes: I do not know about that. Could I explore this difference between the quarterly and monthly meetings? As I understand it, the Council for Financial Stability in its shadow form is currently meeting on a monthly basis. It has presumably met subsequently to its first meeting. Can the Minister explain what the difference between its first two meetings was?

Lord Myners: The Council for Financial Stability has had two meetings in shadow form. One was a quarterly strategic meeting, the minutes of which have been published and are available on the Treasury website. They meet many of the tests that noble Lords have set in terms of clarity and clear attribution of comments, with a focus on the contributions made by the members of the council, including those of some of the bit-part players who have been allowed to make modest contributions and to have their moment in the sun. The council is meeting again this week in its shadow format. The two non-quarterly meetings-that is the one that we have held and the one that we are holding later this week-deal very much with issues of the moment relating to markets, individual companies and economies. I do not think that it would be right for me to go further than that, without undermining our very clear distinctions.
	The quarterly strategic meetings will, importantly, focus on the reports published by the Bank of England and by the Financial Services Authority on financial stability and on financial risk. I note again that the discussion at the Council for Financial Stability takes place after the publication of those reports, so that there is no fettering of the ability of the Bank of England and the FSA to publish their views openly. The fourth major publication moment for the quarterly meetings will be the report published by the Council for Financial Stability under the direction of the Treasury.
	So there is a very clear distinction and difference between the issues of the moment of the monthly meetings, as they are at the moment, which rather speak to at least some of the points made by the noble Lord, Lord Stewartby-although my noble friend Lord Davies of Oldham was correct in reminding the House that the Council for Financial Stability is not an executive body-and the quarterly meetings, which are more reflective in terms of their focus on the central risks to the financial system.

Baroness Noakes: My Lords, I am sure that that is now as clear as mud for everybody. I thank my noble friends Lord Northbrook and Lord Howard of Rising for their contributions to this short debate. It is very mysterious that you could have body which somehow divides itself up into an operational being-meeting other than quarterly-and a strategic being-meeting quarterly-when it is very clear just by looking at the first set of minutes that there was not just strategy discussed.

Lord Myners: I did not say-and would not have wanted to have said-that the monthly meetings are operational. I said that they deal with issues of the moment relating to specific companies, countries and markets. I did not say that the Council for Financial Stability is an operational or executive body.

Baroness Noakes: My Lords, I did not intend to say that the body was executive. We flogged that one to death on the first day of Committee when we found out that this is just a talking shop. Everybody knows that this is just a talking shop. This is another case of the Government being in fantasy land. They have invented the Council for Financial Stability-which is a way of dressing up some failed arrangements. They have elaborately put Clauses 1 to 4 in this Bill. They have people attending it; they have created a secretariat, minutes of two kinds of meetings, schedules and all kinds of things like that. They have a little bit of transparency, because they will tell us what is in some kinds of meetings, but not what are in other kinds of meetings. The more we hear about the Council for Financial Stability, the more it has no real meaning.
	If something is as flawed as this, it is clearly very difficult to improve it. We will carry on trying to improve it, but perhaps not with this amendment. I beg leave to withdraw the amendment.
	Amendment 19 withdrawn.
	Amendment 20 not moved.
	Debate on whether Clause 2 should stand part of the Bill.

Lord Lawson of Blaby: My Lords, I shall be very brief. I intervene particularly because I wish to apologise to the House. When I spoke on Second Reading on 23 February, I failed to declare an interest, which I now believe I should have declared, as chairman of Oxford Investment Partners, an investment company that is majority-owned by a number of Oxford colleges. It is regulated by the Financial Services Authority, as indeed am I personally as its chairman. I forgot about it because I was not talking about that at all; I was talking about the need for a structural separation between conventional banks, utility banks, narrow banks and investment banks-this sort of Glass-Steagall thing. I should have declared this interest and I apologise.
	While I am on my feet, however, I think that the Minister also owes the House an apology of a different kind. On Second Reading, he said:
	"Arguably, the only advanced economy able to largely withstand the banking crisis was Canada, and its regulatory structure is very similar to our own".-[Official Report, 23/2/10; col. 1000.]
	When I heard that I was very puzzled, because I did not think that it was. However, I thought that I should check up on it first. I found that, in a fundamentally important way, it is not similar. Our structure-which the Council for Financial Stability, or whatever it is, enshrines-is a tripartite structure. The Canadian structure is quadripartite, which is fundamentally different. The Canadian system separates conduct of business regulation from prudential regulation. They are in two completely separate institutions, whereas our system puts them together. In my judgment, that is the single biggest mischief in the tripartite system that the Government have put into place. Conduct of business regulation is a totally different matter, requiring a totally different expertise and totally different kinds of people from those required for prudential supervision and prudential regulation. They have to be separate. You can separate them out in two ways: you can do it as the Canadians have done it, or you can do it as the Conservative Party has decided is the right way, by putting prudential supervision with the Bank of England and separating out the conduct of business regulation.
	The mischief is not just that these two activities are completely separate and require different qualities, skills and, incidentally, different pay grades; conduct of business supervision and regulation-which involves questions about mis-selling and consumer protection issues and so on-is constantly in the public eye. That tends to be the main focus of the people responsible for the regulator. That is one of the main reasons why they manifestly did not have their eye on the ball when it came to the need for prudential supervision and prudential regulation. This is of fundamental importance and a fundamental reason why the tripartite system is no good and has to go. It is also a reason why the noble Lord, Lord Myners, inadvertently misled the House on 23 February.

Lord Higgins: My Lords, I have always believed that affairs in this Chamber should be debates and not conversations. Therefore, I did not come back on my point to which, with great respect, the Minister did not reply. However, I am not clear why the reports under Clause 2(2) assessing the risk to the stability of the UK financial situation are to be made only by the Bank of England, on the one hand, and the FSA on the other. One might think that in a tripartite system there could be some issues which neither the FSA nor the Bank are immediately responsible for but which might be reported as a risk as far as the Treasury is concerned. I do not think that I have had an answer on that omission.
	My only other point is rather more fundamental. On the whole, the failure of the existing tripartite system, and the past one, resulted largely from a lack of co-ordination between the three component parts. The Bill seeks to ensure that the three parts do co-ordinate their efforts in future, and that is very much to be welcomed. However, there are some dangers. If all these reports and so on are to be published under Clause 2 and it can soon be seen whether there has been an adequate response to them, it might have a destabilising effect rather than a stabilising one.

Baroness Noakes: My Lords, I spoke to the question of whether Clause 2 should stand part during our first Committee sitting, when we debated whether Clause 1 should stand part. However, perhaps I may just say how much I agree with my noble friend Lord Lawson on the split of conduct of business and prudential regulation, which is a point that I made during that sitting. It was one of the clear failings of the arrangements set up by the Prime Minister when he was Chancellor of the Exchequer in 1997, and it has contributed to the problems we found when the financial crisis hit the UK. That is why we proposing reversing it.

Lord Hodgson of Astley Abbotts: My Lords, when the Minister reflects on our debates on this clause and on the official and unofficial meetings of the council-the quarterly meetings, which are strategic, and the interim ones, which are "operational", which I think was the Minister's phrase-will he also reflect on the fact that knowledge that the council has met, knowledge which may well be spread abroad, while no minutes are being published, will have a far more destabilising effect than fessing up and explaining what is happening? If we are to have these meetings-some of which are to be minuted while others are not-people will draw the very worst conclusions from the meetings that are not minuted.

Lord Myners: My Lords, I shall address the points made by the noble Lords, Lord Lawson, Lord Higgins and Lord Hodgson of Astley Abbotts. When the noble Lord, Lord Lawson, said that he should perhaps have made a declaration, I thought that it might even have been a declaration of his previous directorship of Barclays Bank. Earlier today, during Question Time, the noble Baroness, Lady Trumpington, declared an interest in a body that she had chaired some time ago. What noble Lords are meant to declare in debates seems a confusing matter. One of the strengths of this House is that everyone who participates in a Committee such as this one makes a contribution on the basis of extraordinary involvement and experience in the financial sector-in clearing banking, private equity, investment management and all other spheres. We draw great strength from the fact that Members of this House have such experience.
	Perhaps I may make a conditional apology to the noble Lord, Lord Lawson of Blaby. If I was incorrect in what I said, of course I will apologise to the House. However, I am not at this stage convinced. The difference in regulatory responsibility which Canada reflects in the division of responsibility between prudential regulation and conduct of business-a difference which one or two other regulators also reflect either in their structure or in the fact that there are two different bodies-does not depart from the fact that Canada, like the UK, has a separation of responsibilities between the Treasury, the central bank and the bodies that are responsible for regulation. Specifically, I do not believe that regulation and conduct of business in Canada are the responsibility of either the Treasury or the central bank. It was on that basis that I suggested that Canada's structure was similar to that of the UK.
	I would also argue, if time permits, that I was not suggesting that Canada was saved by its regulatory structure alone. There are a number of features to the Canadian banking market-in particular the guaranteeing of residential mortgages-which meant that many of the problems experienced in the United States and elsewhere with subprime mortgages were not visited on Canada.

Lord Lawson of Blaby: My Lords, I am most grateful to the Minister for giving way, I am grateful too for his conditional apology, and I hope that he will look more closely at this. The point is, however, that in every country the Treasury and the central bank are separate, so what we are talking about is the specific issue of the supervisory and regulatory arrangements for financial institutions. It is a fundamental difference whether you have one or two covering conduct of business and prudential.
	The noble Lord was kind enough on Second Reading to say that he had put aside my memoirs for rereading. I love the "re"; I am most grateful to him for the "re". If he recalls, I described in my memoirs the White Paper on banking supervision, which I published a quarter of a century ago, in which I indicated how this issue could be strengthened. The one thing it had to be clear about is that prudential supervision and conduct of business regulation are two completely separate activities and it is damaging to put them together.

Lord Myners: I am familiar with the arguments that the noble Lord reflects in his contribution, and it is correct that I am rereading his memoirs. He quoted in Second Reading from something which appears quite early, in chapter 32, of his memoirs. This weekend, I saw a reference to an editorial which the noble Lord had written as a youthful editor of the Spectator. He had given guidance on a situation in which even the readers of the Spectator might have concluded that a change from a Conservative Government might have been the appropriate action. I will be digging in my archives to see if I can find this.
	I see a look of puzzlement on the face of the noble Baroness. If I misread the Coffee House blog, as produced by the Spectator, I will not be able to find the article which the blog attributes to the noble Lord.

Lord Lawson of Blaby: It is more than 40 years since I was editor of the Spectator. Not only was there no Coffee House blog in those days, there was no blog anywhere in the world.

Lord Myners: I do not want to be detained on this subject, however the beauty of the digital media is its ability to allow us, at a couple of clicks, to find the pearls of wisdom produced by the noble Lord when he was editor of the Spectator, some 40 or 50 years ago. I, for one, am delighted that I am able to access such insights.
	The noble Lord, Lord Higgins, refers to Clause 2(2), which relates to the publishing of reports. The reports to which this refers are of course the reports which are already produced by the Financial Services Authority and the Bank of England. The council will also produce a report on financial stability, and the Chancellor of the Exchequer will continue to account for the regulatory architecture and the Treasury's views on financial stability to Parliament and to the Treasury Select Committee. I see no need for an additional, formal report from the Chancellor; there is a danger that we might go from having very little transparency to being overwhelmed by it.
	The noble Lord, Lord Hodgson, referred to the fact we will know that non-quarterly meetings have taken place and that in itself will lead to speculation as to what might have been discussed in those meetings. The markets and investors are already aware that the court of the Bank of England and the board of the Financial Services Authority meet on a monthly basis. That court and that board discuss issues which are confidential and market sensitive and are they not under an obligation to publish minutes. The fact that those meetings are taking place does not appear to pose any threat or speculation as to the issues which might have been discussed or conclusions which might have been drawn from matters which were on the agenda for those meetings.

Lord Hodgson of Astley Abbotts: This is of course called the Council for Financial Stability. It is a very central matter; it is concerned with co-ordinating the preservation and stability of our financial markets, so it is not like the sort of executive board the Minister describes; it is central to our financial affairs. Therefore when it becomes known that it has met out of sequence, people are bound to ask what it is meeting about; what is the instability threatened about which co-ordination is required? People will inevitably draw the worst conclusions, as that is human nature.

Lord Myners: I do not think it will necessarily be a matter of public record that the non-quarterly meetings have taken place, and therefore this concern which the noble Lord has should not arise.
	Clause 2, as amended, agreed.
	Amendment 21 not moved.
	Clause 3 : Annual report
	Amendment 22
	 Moved by Baroness Noakes
	22: Clause 3, page 2, line 41, leave out "Treasury" and insert "Council"

Baroness Noakes: My Lords, I shall speak also to Amendment 23. We have now reached Clause 3, which deals with an annual report of the Council for Financial Stability. Under Clause 3(1) the Treasury is required to produce an annual report of the council's work. I have suggested amending this by Amendment 22 to say that the council should prepare its annual report. Amendment 23 would amend Clause 3(1)(b) so that the report is to cover the council's views of what is important about UK financial stability rather than the Treasury's views as currently drafted.
	It seems to me that if the Government are serious about the council making a contribution to financial stability, with the three principals contributing on something near an equal basis, it cannot be seen as an outpost of the Treasury. If it is just the Treasury calling in the Bank and the FSA once a quarter, or even more frequently, to discuss their reports and then the Treasury writing up its version for the outside world and Parliament, the Government will soon undermine their own creation.
	There is an important issue here. It is clear from the draft terms of reference and from the minutes of the first meeting of the shadow council, both of which I refer to today, that the Treasury is in the lead. Of the 14 people attending the meeting of the council in January, eight were from the Treasury, compared with three each from the Bank and the FSA. It seems the secretariat is provided by the Treasury.
	This is a familiar syndrome. The Government have a problem-in this case it is the credibility of their financial stability arrangements. They then set up a body or a committee or, as in this case, a very grand council. Then they get some heavy hitters on it and then they swamp it with people from the Treasury who, being very clever people, can manoeuvre the body to their own ends. I will not name names today, but I can produce a pretty long list of people who have been sucked into these sorts of bodies only to find that they are a front for the Treasury doing its own thing.
	The Treasury already has its fingerprints all over the Council for Financial Stability. It sets the terms of reference and the Treasury, in the form of the Chancellor or his deputy, will always chair it.
	When this was debated in another place the Minister said that the Treasury had to have control over the annual report because it was the Chancellor who was accountable to Parliament and to the public. However, that is only partly true, as Parliament would expect to discuss the workings of the Council for Financial Stability with both the Governor of the Bank of England and the chairman of the FSA, both of whom are already regular attendees at the Treasury Select Committee in another place and in Select Committees in your Lordships' House. Of course we accept that the buck stops with the Chancellor-we teased that out on our first day in Committee-but he does not need a Council for Financial Stability in order to talk to the FSA and the Bank of England.
	The Bill is predicated on there being some substance to the Council for Financial Stability and, if that is the case, it cannot be just a front for the Treasury. One way of demonstrating that substance is for the council to have its own annual report. The Bill is confused about the role and the real importance of the Council for Financial Stability. Our solution is not to have it at all because it would be redundant in our scheme for reuniting macro and micro-prudential supervision but, if it is to remain in the Bill, it ought to have logic and a consistency about it. I beg to move.

Lord Howard of Rising: In supporting my noble friend's amendment, I would point out to the Minister that if the council reported, it would have the advantage of the Governor of the Bank of England being involved. As he pointed out to me earlier, if the Governor of the Bank of England is involved it would give certain probity to proceedings that might not otherwise be there.

Lord Myners: In refining the tripartite through the Council for Financial Stability, the Government are keen to improve the transparency and accountability of the current arrangements. The publishing of minuted quarterly meetings forms an important element in this, as does the formal report on the council by the Treasury each year. The report will cover the activities carried out by the council and it will also describe significant regulatory actions taken and future developments proposed for regulatory legislation.
	Amendment 22 would require the council and not the Treasury to prepare the report. The Government believe that it is appropriate for the Treasury to lead on the drafting of the annual report; the Chancellor is in the chair of the council and is ultimately accountable to Parliament and the public. We recognise the vital interest that other council members have in the report. As such, it is not the intention of the Treasury to produce a report without recourse to the other authorities. Indeed, Clause 2(3) provides explicitly that the draft of any report prepared by the Treasury must be considered by the council at one of its quarterly minuted meetings, and noble Lords will bear in mind that comments will and can be attributed to members of the council at those meetings.
	The draft terms of reference also sets out a formal engagement process for the council prior to publication, and there will clearly need to be official-level engagement between the Treasury and other authorities prior to any formal discussion. In sum, the authorities will work closely on the production of the report and the council will formally consider and discuss a draft of the report in advance of publication. That discussion will be publicly published with the comments of both the chairman of the Financial Services Authority and the Governor of the Bank of England minuted-as will be the comments of the Chancellor-if they wish to make minutable comments. However, it is right that the responsibility for producing the report lies with the Treasury. The Bank of England and the FSA will continue to produce their own regular reports on the risks to financial stability and their own annual reports on which they will be free to comment on the Council for Financial Stability.
	Amendment 23 concerns the scope of the report as set out in Clause 3(1). The report is intended to cover the activities of the council in the previous year and, additionally, any matters that have special significance for the stability of the UK financial system. The amendment would change the scope of the report to being a matter for the council and not the Treasury. I do not accept this proposal for two reasons. First, the report is conceived as a report of the Treasury and, as such, provides an avenue for the Government to report more widely on financial stability. A Treasury report adds balance to the work of the council, with other members providing the financial stability report and the financial risk outlook. Secondly, other members will have the opportunity to be fully consulted, as I have set out previously. There is, therefore, scope for the views of all members of the council to be incorporated in the final report and transparently recorded.
	On the clause stand part debate, the Government believe that the annual report provided for by this clause will provide for enhanced transparency about the work of the council, the risks to financial stability and the actions that are being co-ordinated to mitigate those risks. I cannot see how removing this requirement for greater transparency and accountability would in any way be beneficial to the maintenance of financial stability. I may well have led a sheltered life, but I do not think I have been so sheltered that I cannot see that the proposals made here represent a significant step forward in transparency and accountability. Accordingly, I urge the noble Baroness to withdraw her amendments.

Lord Northbrook: My Lords, it is a fairly weak sanction in Clause 2(3). It states:
	"Where the Treasury prepares a draft report under section 3, the Council must consider the draft"-
	but it cannot do anything about it. Coupled with my noble friend's comments on the balance on the council of eight, three and three, it is not going to have any ability to override in the final instance the Treasury's views.

Lord Myners: I can only repeat to the noble Lord, Lord Northbrook, what the noble Baroness has been saying: there are three members of the council. There may well be others in attendance providing support to the three principal actors, plus those responsible for minuting the meeting, but the council comprises the Chancellor of the Exchequer, the Governor of the Bank of England and the chairman of the Financial Services Authority. They will consider the report in a minuted meeting and if they were not happy with the report I am confident that the chairman of the FSA and the Governor of the Bank of England would make clear in their comments that they were not content, and they would, through the careful process we have set out for ensuring that there is adequate time to prepare and agree the minutes, ensure that those minutes reflected their views. I regard that as a powerful sanction. Indeed, I would suggest to the noble Lord, Lord Northbrook, that they are akin to the raising of eyebrows-a sanction to which the noble Lord has in the past referred to with some fondness.

Baroness Noakes: My Lords, the Minister gets ever more ingenious in his defence of the nonsense that is in the Bill. The Government are trying to pretend that the Council for Financial Stability means something and then, all of a sudden, it is the Treasury that takes the lead on drafting and produces the report. That is not covered by Clause 3, which states that the Treasury must prepare a report and include matters which in the opinion of the Treasury are significant. We are told that the really important sanction is that the Governor and the chairman of the FSA can have minuted the fact that they do not like what is in the report. This is worse than fantasy: it does not have coherence or logic; it is plain that this is a body which fulfils a Treasury civil servant's idea of what it will be like in practice to have three important people working together.
	I shall not take any more of the Committee's time today. The points raised by my noble friends Lord Northbrook and Lord Howard of Rising are entirely to the point. We have not heard a single bit of sense from the Minister in his defence of the Treasury taking the lead and deciding what goes into the annual report of the council, other than to underline that the council is a piece of nonsense. I beg leave to withdraw the amendment.
	Amendment 22 withdrawn.
	Amendment 23 not moved.
	Amendment 24
	 Moved by Baroness Noakes
	24: Clause 3, page 3, line 9, at end insert "or market sensitive"
	Amendment 24 agreed.
	House resumed. Committee to begin again not before 8.30 pm.

Licensing Act 2003 (Mandatory Licensing Conditions) Order 2010

Copy of the Order 
	Copy of the Report

Motion to Approve

Moved By Lord Brett
	That the draft order laid before the House on 27 January be approved.
	Relevant Document: 7th Report from the Joint Committee on Statutory Instruments.

Lord Brett: My Lords, this order is designed to help tackle alcohol-related crime, nuisance and disorder, and to protect children as part of the Government's wider alcohol strategy. It sets out five new mandatory licensing conditions that will apply to all those licensed to sell or supply alcohol in the "on-trade", such as pubs, bars and members' clubs. In addition, the mandatory condition on age verification will also apply to the "off-trade", such as supermarkets, off-licences and convenience stores.
	These conditions have been designed to bring an end to irresponsible promotions and practices in the retailing of alcohol; to ensure higher standards across all premises; to protect children; and to give customers greater choice in the size of drinks they can buy and the option to have free tap water. By making sure that all licensed premises across England and Wales meet these minimum responsibility standards, this order will help to tackle alcohol-related crime and disorder and will make the night-time economy a safer place.
	The draft order sets out five new mandatory licensing conditions that will: ban irresponsible promotions; ban the dispensing of alcohol directly into the mouth; ensure that customers have access to free tap water so that they can space out their drinks and not get too intoxicated too quickly; ensure that an age verification policy is in place to prevent underage sales; and ensure that customers have the opportunity to choose small measures of beers, ciders, spirits and wine. I think there is widespread agreement that promotions such as "all you can drink for £10"; "women or under-25s drink for free"; or "speed drinking competitions" are not the types of promotions that responsible businesses should run.
	Opposition to the code has been raised in a debate in the other place and in the licensing trade press. I would like to take this opportunity to address some of those points so that noble Lords are clear on the content and impact of the order. The criticism has been put forward that the order is not needed and would not work. That is not the case. According to the British Crime Survey, in 2008-09 there were 973,000 alcohol-related violent offences in England and Wales. Dealing with alcohol-related crime costs society between £8 billion and £13 billion per year. Alcohol-related crime and disorder has a huge impact on local communities. The recent economic downturn has seen premises in some areas competing more aggressively with each other in order to attract customers. Often this will involve attracting customers through various forms of alcohol promotions, which encourage drunkenness and then turn the problem out on to the streets of our towns and cities, making them "no go" areas for the responsible majority of citizens who want to be there.
	That is why this legislation is needed-to rule out those types of irresponsible promotions and practices. The police, local councils and those working in accident and emergency departments tell us of the cost of having to deal with this problem, but simply adding more enforcement to our streets on Friday and Saturday nights is not the answer. Those selling alcohol have a responsibility here not only to their customers but to the wider communities that they are part of.
	Two government consultations-one in 2008 and one in 2009-have confirmed that the public, the police, and licensing authorities have strong support for this mandatory approach and the conditions outlined in the order. Will this approach work? Our consultation showed that those involved in enforcement and licensing at local level believe that this will have a positive effect and warmly support its introduction. This has been reinforced by the Association of Chief Police Officers, which has recently sent us this statement of support. I shall read it in full so that I cannot be accused of misquoting. It says:
	"These conditions, if adopted, applying as they will universally, are a proportionate way forward to assist in driving up standards of trading across the sector. In reducing such headline clearly irresponsible promotions, as already mentioned, and by ensuring some of the best practice is applied across an industry sector, this mandatory code will help to create a balanced atmosphere and serve as an example to responsible drinkers going out to enjoy the highly valued sections of the entertainment economy that have alcohol as a constituent part".
	In addition, we have supporting statements from individual police forces such as Nottingham and north Yorkshire. It is not just the police that support this action, the alcohol retail industry also supports it. Heineken, which operates more than 2,000 pubs in the UK and is the country's biggest brewer, has also sounded its support. It has told us:
	"Heineken UK welcomed the opportunity to participate fully in the consultation process on the Mandatory Alcohol Retailing Code. We found the Home Office to be open and responsive in taking on board industry concerns about some elements of the original draft, such as the local discretionary conditions. This partnership working approach has ensured the final version of the Code is proportionate, raising standards by banning the extreme end of promotions, such as drink all you can for £10. We do not believe this kind of deep discounting to drive footfall sits side by side with the promotion of responsible consumption".
	We have similar supporting statements from other brewers-Greene King springs to mind. Heineken's statement continued:
	"We also welcome the requirement to ensure free tap water and smaller measures are available as another contribution towards making town centres and our night-time economy a welcoming environment for everyone and achieving our shared aim of reduced alcohol-related crime and health harms".
	Criticism has been made of the costs attached to the introduction of the mandatory code. The £381 million figure used in the impact assessment is an estimate of the costs to businesses over a 10-year period and applies only to those who do not currently do what this order will require, so if you are running a responsible premises, offering a choice of measures and running a Challenge 21 scheme, you will not incur any new costs. Page 14 of the impact assessment sets out that the annual cost to an affected licensed premises for the first year is £703 and £544 for subsequent years. This equates to £1.92 and £1.49 per day respectively for those premises that are not already doing any of what is set out in the order. Let me be clear that these figures include the age verification condition. Data show that 68 per cent of pubs and more than 80 per cent of off-licences and supermarkets already run a Challenge 21 or Challenge 25 scheme and therefore will incur no cost by virtue of this condition. It is also important to note that not all the costs set out in the impact assessment are "real costs" in terms of money paid out by a business. The impact assessment says that,
	"all cost estimates presented are economic costs and not financial costs. A large proportion of the estimated costs are due to staff abstraction from other duties, which will not necessarily have any financial impact".
	A number of on-trade businesses responded to the consultation saying that complying with the mandatory conditions would cost them nothing at all as they were already meeting these conditions. This was our intention when drafting the order-namely, to target only the irresponsible minority of alcohol retailers. It is important to reiterate that alcohol-related crime and disorder cost society between £8 billion and £13 billion per year.
	As noble Lords will see from the draft order, the Government wish to delay the introduction of the conditions on age verification and ensuring the availability of small measures until October 2010 in order to allow businesses more time to prepare to comply with them. We are currently working with the licensed trade to make examples of suitable age verification policies available to businesses for them to use to help reduce the burden and to ensure that these policies are effective and of a good standard. I believe that this strikes the right balance between stamping out irresponsible promotions and practices in alcohol retail that contribute to crime and disorder and keeping the costs to businesses as low as possible. I beg to move.

Lord Skelmersdale: My Lords, if the whole country did not know that there was an election coming, it would on reading this order. As the Government have been spectacularly unsuccessful in reducing the amount of alcohol-related crime over the period of this Parliament, they have now decided that this is the moment to introduce five of the nine mandatory conditions we were promised during the passage of last year's Policing and Crime Act. Why so few? Why were the Government so adamant last year that nine were necessary, but now we see only just over half that number? Could the Minister's colleagues not come up with any more abhorrent practices in pubs, or is it a case of legislate in haste and repent at leisure? Not all practices in pubs and clubs are abhorrent, of course. There is no doubt-and as the Explanatory Memorandum shows, the Government agree-that, when used responsibly, alcohol can enhance social occasions and can have an important and positive role to play in society. In this connection, I congratulate on-trade and off-trade alcohol producers and Drinkaware on their smarter drinking campaign of the past couple of years.
	However, it is when alcohol is taken to excess that serious problems occur. Not only were there almost 1 million victims of alcohol-related violence last year-astonishingly, almost half of all violent crime is alcohol-related-but also, as the Minister told us, the cost to the taxpayer can be as much as £13 billion each year. The Government are not alone in wanting to reduce these costs and the social implications of alcohol abuse, which is why I feel so strongly about clearing up some of the issues in the order. Once and for all, real action could be taken and real improvements seen.
	I am content with two of the five mandatory conditions. For instance, the mouth-to-mouth transference of alcohol is positively revolting and, I suspect, carried out only when the donor is drunk-I might be wrong on that and the Minister may be able to correct me. The provision of free tap water is also sensible. However, I note that the order does not state that it has to be potable. There are many taps in your Lordships' House, but only a few of them are described as suitable for drinking. I am surprised that it is necessary to legislate for the latter in such a heavy-handed way.
	Like my honourable friend in another place, I have a problem with paragraph 4, on age verification. This section states:
	"The policy must require individuals who appear to the responsible person to be under 18 years of age (or such older age as may be specified in the policy) to produce on request, before being served alcohol, identification bearing their photograph, date of birth and a holographic mark".
	This is a very obtuse policy. We on these Benches are aware of the continuing, significant problem of under-age drinking and want to support any sensible measure to stamp out the problem. However, this section does little more than provide premises with more confusion and bureaucracy, which this struggling industry certainly does not need. Is the Minister aware that this section may result in the wide-scale removal of operators of Challenge 21 or Challenge 25 policies? The order requires premises to have in place an age verification policy. That is fair enough-I read that as a single-age policy. Should a pub choose to apply a policy that requires its staff to request age verification from, let us say, every customer who appears to be under 30, an offence would be committed if the policy were not fully applied. In that instance, if a member of staff inadvertently failed to challenge someone who appeared to be under 30, an offence would be committed carrying a fine of up to £20,000. The rational choice for the pub would therefore be to operate a policy that required challenge only to individuals who appeared to be under 18, to avoid the risk of inadvertently breaching a policy that challenges customers who appear to be between the ages of 18 and 21 or 18 and 25. We suggest taking out the phrase,
	"or such older age as may be specified in the policy".
	I am also slightly perplexed by paragraph 7.7(ii) of the Explanatory Memorandum, which states that,
	"the Government has decided to include a mandatory licensing condition to ensure that all those selling or supplying alcohol have an age verification policy in operation that requires them to check the identification of anyone who appears to be under the age of 18"-
	not any age, but 18-
	"attempting to buy alcohol. The draft Order delays this condition coming into force until October 2010 to allow businesses"-
	as the Minister said-
	"time to prepare".
	Is this not already a mandatory condition? I thought that it was already a legal requirement to check everyone who appears, at the very least, to be under 18; namely, the legal age for buying alcohol in pubs, clubs, shops and so on.
	Furthermore, the Explanatory Memorandum states:
	"Where the young person had attempted to buy alcohol from a pub or club in the last month, 82% had been successful".
	A 2009 survey found that young people are now drinking twice as much as they did in 1990. Considering these statistics and other frightfully high, and ever rising, under-age alcohol abuse figures, is the Minister happy that this policy is effective?
	This section also requires people to provide an ID with a holograph. Is the Minister satisfied that all forms of ID which are currently used and accepted in the UK carry a holograph? I am thinking, for example, of National Union of Students cards and cards specific to educational establishments.
	I move to the provisions stopping irresponsible promotions. Paragraph 1(2) of the schedule states that,
	"an irresponsible promotion means any one or more of the following activities, or substantially similar activities, carried on for the purpose of encouraging the sale or supply of alcohol for consumption on the premises in a manner which carries a significant risk of lead.
	It is followed by five examples. Can the Minister clarify whether the five actions are banned altogether, or are banned only if they are done in a manner,
	"which carries a significant risk of leading or contributing to crime and disorder, prejudice to public safety, public nuisance, or harm to children"?
	Paragraph 1(2)(a) covers,
	"games or other activities which require or encourage, or are designed to require or encourage, individuals to ... (i) drink a quantity of alcohol within a time limit (other than to drink alcohol sold or supplied on the premises before the cessation of the period in which the responsible person is authorised to sell or supply alcohol), or ... (ii) drink as much alcohol as possible (whether within a time limit or otherwise)".
	I presume that these "games" include a pub quiz or darts, where the prize for the winner is a certain amount of alcohol. Is that permitted if it is not done irresponsibly or does not carry a significant risk of leading or contributing to crime, disorder and so on? The same goes for the other headings in the schedule, or are these situations banned altogether regardless? Can I see publicans buying chutney, for example, to give as prizes?
	We agree that drinking alcohol plays a traditional role in British culture and generally it is a positive one. The Government are right to note that, ultimately, whether people drink and how much is up to the individual and that it is their role to make sure that individuals are able to make informed choices and to encourage the public and businesses to act responsibly. However, the Government state in the Explanatory Memorandum that imposing a large number of blanket conditions would not be appropriate. What then do the Government consider the order to be-a small number of blanket conditions?
	The order is riddled with poor drafting and ambiguity. For the Government to prescribe what may or may not take place within licensed premises across the UK under one order is in complete violation of any principle of delegating power and authority to an appropriate level and fails to explore the use of powers already available to address the problem. We can't go on like this. Labour has announced countless initiatives to tackle binge drinking, despite poor enforcement of existing laws; for example, fines for drinking in public. Maximum fines for offences are not being used. Between 2003 and 2007, the last year for which figures are available, only two people were fined more than £250 for refusing to stop drinking alcohol in a designated public place. We need a tougher licensing regime, but the Government need to realise that top-down solutions are not the only answers. We need to give more power back to local communities to control the number of licensed premises in their area.
	Councils and the police desperately need more powers to crack down on under-age and irresponsible drinking. For example, under the Licensing Act 2003, there is a general presumption in favour of granting an application to sell alcohol. It needs to go. The police need powers to object to a licence, which should be applied for regularly. The licensee, whether current or potential, needs to prove that the police are wrong in any assessment that the police have made against them.
	The guidance to the magistrates' courts also needs tightening regarding when a council licensing condition can be allowed and when it should not be. It should be extremely rare to overturn a council's decision. I also believe that if publicans break the law it should be axiomatic that not only the landlord but the premises itself should be sanctioned.
	I can think of other things to curb irresponsible drinking, but this strange order is like the curate's egg-only good in parts and likely to give licensees a stomach-ache, if only because of the drafting. Was it ever looked at by a lawyer outside the Home Office? I doubt it; it shows.

Baroness Hamwee: My Lords, when I first read the draft order I thought it was really rather poor. However, I then reflected on whether an order that seems to me to be poorly drafted and incomplete should be opposed for those reasons, unless given the subject matter it was also positively harmful. The order is seeking to address real harm. The Minister has referred to the cost to society and to individuals through alcohol abuse.
	I do not want to sound pious about this and in case anyone thinks I should not be speaking because I drink so very little, I will acknowledge that on medical forms I should perhaps say "yes" to the question, "Do your friends comment on your drinking?" because they do. I have criticisms and some questions but from the Front Bench I will say now that we are not inclined to oppose the order.
	My first concern is that as licensing has been transferred to local authorities the authorities should be left to set the conditions. Can the Minister tell the House what the response of the Local Government Association, or maybe LACORS, was to the consultation? I would have thought that a menu of possible conditions from which a local authority as a licensing authority could pick would have been preferable but I understand that national guidelines issued to councillors mean that their discretionary power to reject a licence application has been severely curtailed. This leads me to ask what the status of the good practice guidance will be-which I understand from the debate in the Commons the Government are to issue?
	I conducted a very small straw poll of councillors who have licensing responsibilities and their response was that this might be useful but was largely irrelevant-irrelevant because of the wider considerations of whether to grant the licence in the first place and the review of the licence. The detail of these conditions is not needed. There have been many occasions in your Lordships' House when I have proposed amendments to legislation and been warned of the danger of lists because of what is almost inevitably omitted. In addition, it seems to me not only is paragraph 1(2) of the schedule in danger of omitting descriptions of certain behaviour that should be there if the list were to be complete, the more detailed I think the more easily avoided or evaded.
	We are not in a position to amend this order. Perhaps, and this would have answered the point raised by the noble Lord, Lord Skelmersdale, if paragraph 1(2) had simply stated "an irresponsible promotion means one or more activities carried on for the purposes of encouraging the sale" and so on, up to the word "children", without describing what those activities were, I think that would have met the point.
	I have criticisms of some other detail in paragraph 1(1) of the schedule. The responsible person, let us call him the licensee for this debate is to take all reasonable steps to ensure staff do not carry out or participate in irresponsible promotions. I would have thought that a licensee should be under strict liability to ensure that the staff do not get involved in such promotions. Paragraph 3 refers to,
	"tap water where reasonably available".
	Where is it not available in the sorts of premises that we are talking about?
	Paragraph 2 refers to disability, which is defined in the 1995 Act as "substantial or long-term". Concern has been expressed that that would catch somebody who is unable to drink, but not long term unable to pick up a glass, perhaps because of two broken wrists. I was in the position a few months ago of being offered operations on both hands at the same time, which I rejected. I would not have been able to pick up a glass at that point. The noble Baroness is laughing. My response to the surgeon was, "I would need a wife". More seriously, can the Minister meet that concern and explain just what that paragraph means?
	The noble Lord, Lord Skelmersdale, referred to mouth-to-mouth transfer of alcohol. I do not think it is mouth-to-mouth; the word is "directly", which is a bit different. Can the Minister confirm that this does not catch the yard of ale which is a custom in some places? If one were to say to a friend, "What do you think of this? Taste this", would that be de minimis and not something which would cause a breach of the conditions?
	Your Lordships will have had a good deal of lobbying expressing concern about age verification. I am perhaps not as troubled as others seemed to have been, but let me put the question this way. Can the Minister confirm that there is nothing to stop the higher age limit of, say, 21 or 25 being applied and that checking that someone was not under 21 or under 25 would actually meet this provision? Can he also say how formal the policy, which is the word used in paragraph 4, would have to be-a separate policy pub-by-pub, club-by-club? The largest cost by far for affected premises relates to this. It is important to know that this is as straightforward as possible for each of them.
	Can the Minister also explain the extent of the term "premises licence holder"? Concern has been expressed, and it was in the Commons I think, about distance sellers being caught; for example, if you order a case of wine over the internet. I do not regard that as being caught. It does not seem to me that the term "premises" or "served alcohol" would apply, but it would be good to have that on the record.
	The major criticisms are that the order does not entirely cover the off-licence trade and most of all that it does nothing to promote minimum pricing. I say that most of all because it would according to what I have seen of the lobbying and reporting of the issues generally and common sense, it would do most to help reduce binge drinking and drinking by children. It would also ensure that people whose consumption is moderate are not penalised as they are by increases in duty, nor would it penalise responsibly run pubs. I raise it although as far as I can see the underlying primary legislation does not allow for this and it could not be done by statutory instrument. The Minister may have a comment on that as well. Though we are not much persuaded by the draft order, that is not the same as opposing it and we will not do so.

Baroness Finlay of Llandaff: I rise to bring a slightly different tone to this debate. I declare my interest as a member of the BMA and the Royal College of Physicians. I welcome this order, because, in all honesty, I welcome anything that tries to address the culture that we have of grossly irresponsible drinking. If I am right-and I hope that the Minister will be able to confirm this-the balance up till now, following the Licensing Act 2003, has favoured commercial operators over local residents. This, combined with parallel reforms in Section 33 of the Policing and Crime Act, will allow a swing back to people at a more local level, so that they can navigate review systems more easily when they live adjacent to premises in their community that are being adversely affected by the drinking habits locally.
	As the noble Lord, Lord Skelmersdale, said, there have been an alarming number of alcohol-related hospital admissions and, indeed, deaths. The problem overall is one of public safety. It is not about stopping people doing what they want to do sociably; it is about protecting those who have not had a drink from being killed or maimed, seriously or even in a minor way, by somebody who has drunk completely irresponsibly. It is against that background that I welcome this order, which I hope nobody will oppose. I agree that it does not go far enough, but at least it goes some of the way, which is to be welcomed.
	As the noble Baroness, Lady Hamwee, said, it is sad that we have not seen the introduction of minimum pricing. You can see students in the streets swigging on bottles of cheap spirits, especially vodka, which they have bought in the supermarket. They are getting "plastered" before they even start to go out for the night. They are drinking a lot of alcohol to get "front-loaded" before they go out elsewhere to drink. Student balls, of which I have attended many in my more senior years-no longer as a student-have sadly sometimes been a spectacle of the most awful drunken games, with students pouring spirits into the mouth of another student lying on the ground. That has had devastating consequences in the premises, from which that group of students is often banned. I welcome anything that will stop that happening. Some of those students are admitted with alcohol poisoning. It is the irresponsible behaviour of those around that pushed them further over the top when they were already severely intoxicated.
	I think that the pubs would have welcomed minimum pricing, because their biggest threat must come from sales of very cheap alcohol in supermarkets. In a pub, those drinking are overseen and there is an onus to encourage responsible drinking. Landlords in a pub are much more likely to spot the underage than the supermarket checkout person will do. While there is a provision in the order about ID, I have a concern about fake ID, which is readily available over the internet and which fulfils all these criteria. Indeed, I have seen fake ID cards that look completely plausible. I can see that someone working at a supermarket checkout in particular, who is not familiar with the ways of some of these young people, would be completely taken in. It has become increasingly difficult to judge the age of young people, particularly girls, by their appearance.
	I would appreciate it if the Minister could clarify that the tap water provision is to deal with things like pop festivals, where it may be difficult to have a tap out in the field-although one would hope that the organisers could run a hosepipe out across the field to a point, rather than sell water at very costly prices. They could certainly have a tank out there. I hope that there will be some imposition for pop concerts for drinkable water-"potable", from the French-to be supplied. With those reservations, I hope that nobody in this House will reject this order, because it will take us no further forward at all to do so.

Lord Redesdale: It was my intention to oppose the order, although not for the reasons given by the noble Baroness-that some of us support irresponsible drinking. My issue with this comes from having dealt with the Licensing Act 2003. I remember that the Government pushed the Bill because they said that we were going to go for a continental-style café culture. Many of us argued that that would not be the case and that 24-hour drinking was not such a brilliant idea. I speak as someone with an interest, as I own a pub, and I understand that many landlords do not want to be open all hours of the day and night.
	The important issue, and the reason why I oppose the order, is that the 2003 Act was meant to be a liberalising measure whereby local decision-making could deal with local problems. As the noble Lord, Lord Skelmersdale, said, we cannot make rules top-down that would outlaw binge drinking; if we could, the major pieces of legislation that have been enacted would have had some effect. The noble Baroness, Lady Finlay, struck at the heart of the matter: pubs and clubs are usually a regulated environment. Some have problems, but usually they are a regulated environment. Indeed, under the 2003 Act, it is an offence to serve somebody who is drunk. The point that the noble Baroness made about people drinking before they go out is the real issue. The violence that takes place is often due to the very cheap alcohol that people can get from supermarkets. I was discussing this at a dinner party the other night and then counted the bottles afterwards. It is interesting what hypocrisy we all suffer from when talking about other people's drinking habits; we are a nation that drinks far too much.
	I declare another interest as chairman of Best Bar None, a Home Office-funded scheme, which works with the pub and club trade to raise standards. The winner of the best scheme last year was Durham, where there has been a 36 per cent reduction in violent crime in the city centre. That is good for business as well, because there has been an increased footfall. Leicester won the year before; there was a 26 per cent reduction. Instead of bringing forward these mandatory codes, which cause an enormous amount of paperwork and bureaucracy for all involved-and the costs do not take into account the fact that there is an enormous amount of red tape for any landlord-we should make the system as simple as possible. However, we must make all those laws enforceable and all those people holding a premises licence act to the best of their abilities. That would bring down violent disorder.
	One issue that I have with these mandatory codes relates to the question asked in the consultation process: why are we undertaking more mandatory codes rather than enforcing the laws that already exist? The answer reportedly given by the Home Office was that local authorities are not enforcing the laws. We have the laws in place; we just have to make sure that they are enforced. I very much hope that some of the issues raised here will not make life very difficult. It seems utterly ridiculous that, if you have a 24-hour policy on your books, you could have a problem, even if you are acting in a responsible manner, because you could lose your licence or be fined by the local authority, whereas someone who had only an 18-hour licence may not be. That is one problem that I have with the drafting.
	I do not believe that there needs to be a vote on this, because I do not believe that it would take anything forward. We need to promote good practice schemes. Instead of having poorly drafted and draconian legislation, we need to work with the pub industry within the regulated environment and deal with the unregulated drinking that is taking place on every street corner in the country, including the underage youth drinking, which is a major problem. One issue that I have with this measure is that it talks about irresponsible pubs. In this House, I have heard people giving examples of massive drinking taking place in one pub or another. However, such drinking does not generally take place in responsible, regulated premises, because the measures in the 2003 Act mean that a pub could be closed down. I take on board entirely the point about the health implications, but we need to work with the industry, which is regulating, because we are not going to ban alcohol in this country in the very short term.

Lord Brooke of Alverthorpe: My Lords, I, too, was involved in the 2003 Act and was one of those who foresaw that there may be problems in a good many areas with the relaxation taking place. I look back now and see what has happened over the ensuing period and, while I support the measure before us this evening, I tend a little towards the view expressed by the noble Lord, Lord Redesdale-I would be surprised if a great deal changed as a result of this order being put into force.
	If there was ever a case for post-legislative scrutiny, this is it. We should be taking the 2003 Act and working through it, consulting the public directly about what they think. Wherever I go, there is a general feeling that what has happened since 2003 has been quite disastrous from a whole variety of standpoints, not least the wide-scale extension of the granting of leases to sell alcohol. It is easy now to get your hands on alcohol. The situation would have been beyond belief when we passed the Act in 2003.
	I live in Brighton and I have a few statistics for the Minister. For every 84 households in Brighton and Hove, there is now a bar or an off-licence to supply alcohol. There are 1,362 places selling alcohol-one for every 150 adults in Brighton. The director of public health, Dr Tom Scanlon, states that 25 per cent of the 205,000 adults in Brighton are drinking hazardously, with alcohol-related admissions to local hospitals doubling between 2003 and 2008. Thirty-six men and women out of every 100,000 Brightonians are dying from alcohol-related issues. This is an epidemic. If it was under a different heading-"Accidents on the road", for example-people would be crying scandal and saying that something must be done about it.
	We have some major problems. I am sorry that the Government have still not been prepared to embrace the minimum alcohol pricing per unit. My question to my noble friend is: when are we going to do something about pricing? Equally, I come back to the point about the granting of local licences. It appears that localism is operating in the granting of licences. However, when one examines what each of the responsible bodies involved with granting the licences is saying, they are all unhappy with the situation and are blaming each other-or someone-for having created this liberalism that means that virtually anybody who wants a licence these days can get one without too much trouble. In an area not covered by the debate this evening, we have seen the growth of the granting of licences to off-licence premises. The number that has been granted is phenomenal. If you walk down the street now and look at a shop, it will say not just "Grocer", but, "Off-licence", all tagged on. In the area where I live in Brighton, almost everyone now has a licence. Some of them are even open 24 hours a day, seven days a week and residents are complaining about the noise and activities that go on around them. This has to be addressed-and in a much stronger fashion than we have been willing to do so far.
	As I say, I support the instrument before us. It is better having these provisions than nothing at all, but really we need a more fundamental review in the future, hoping that the Government are back in power. I trust that the Minister can give some indication of the areas that need further work and say where we might see far more effective policies brought to bear-perhaps even a piece of post-legislative scrutiny.

Lord Rea: I reply briefly to the noble Lord, Lord Redesdale. Does he not believe the words in the Explanatory Memorandum that the mandatory regulation has been made necessary because the voluntary code, agreed by the industry in 2005, has not been followed? The document states:
	"Whilst the majority of premises are well-run, the review revealed a disturbing level of irresponsible and harmful practice in significant sectors of the industry, along with evidence that the current social responsibility standards were not being consistently applied or were ineffective in promoting good practice".
	I am sure that that does not apply to his own pub, which I am sure is run impeccably, but a lot of people out there are not sticking to that voluntary code of practice, which is the reason for these mandatory regulations. I do not think that it is enormously draconian-it is really quite a small raft of mandatory conditions. This is a useful, but not sufficient, regulation.

Lord Brett: My Lords, as ever when we discuss orders such as this, the number of questions is legion. I will seek to do my best with all of them, or certainly most of them. If I fail, I will write to your Lordships. Also, there is always a bit of a disadvantage for the opposition spokespersons, who have to decide what they are going to say before they hear the Minister's speech. A number of questions raised by the noble Lord, Lord Skelmersdale, were dealt with in my opening statement.
	I will deal with specific points. Why did we say nine and why have we only introduced five? The Policing and Crime Act allows for up to nine conditions. This would ensure that we got the balance right between central government setting out what licensed premises should be doing and leaving local licensing authorities in the driving seat. All the stakeholders and general public suggest that the issues set out in this order are those on which it is right to take action now. I turn to an important point that my noble friend Lord Brooke of Alverthorpe and others have raised. This does not mean that in the future more will not be added or, indeed, some removed. Having up to nine conditions set out in secondary legislation gives us flexibility to tackle any issues that arise in future.
	For example, we can see the connection between binge drinking and health issues, but we are not in a clear position to see the relationship between drinking alcohol bought from supermarkets, for example, and crime-related issues. We all feel that we have seen something, but we need evidence. The University of Sheffield is undertaking a further piece of research for us, which will be available later this spring. If there were compelling evidence and the Government decided to introduce minimum unit pricing, there is no reason why that could not be done within the remaining four unallocated parts of the order. It would then be subject to affirmative resolution in this House, but this is not something that is set in stone.
	On the question of whether drinking water would need to be of a potable standard, it has to be tap water and therefore by definition has to be of a potable standard.

Lord Skelmersdale: I do not know when the Minister was last on a train, but cold water comes out of a tap that firmly states that the water is not for drinking. Trains serve alcohol, after all.

Lord Brett: Trains also serve tea. As far as I understand it, non-potable water is not used for making tea. That is a tiny point. The truth is that in the past there has been a reluctance to provide tap water in some areas, but in the majority of cases it is provided without too much difficulty. A good point was made about pop festivals, which cover a large area. If the licensing law demands that something happens, it will be for the promoters to find a way of making it happen. They will not be relieved of that duty.
	Another point about water was determining what was reasonable. If you suddenly lost your water supply at 10 o'clock at night in your pub, it would not be reasonable to expect you to provide tap water. But it would be totally unreasonable if you said, "We haven't had any tap water for three weeks and we are not bothering to get it repaired. When the man comes round to fix it we'll start giving you tap water but in the mean time, tough". It is a question of common sense.
	There was another fear that this will impinge on the Challenge 21 and Challenge 25 schemes. There seems to be some worry in the minds of noble Lords that this could have a damaging effect. It does not bring an end to Challenge 21. Any business choosing to operate a scheme that builds in due diligence by asking those who may appear to be under 21 and could be potentially under the legal age of 18 would not be punished for not asking for the ID of a 20 year-old. The IDs that will be considered are the ones with holograms such as a driving licence, pass or passport.
	I recommend a very useful piece of plastic-an ID card-which will not only provide the ability to go into clubs and pubs and prove your age but the ability to travel around Europe without carrying your passport. One of the difficulties of young people carrying passports, as I know to my cost, is that they get badly damaged by people carrying them to prove their age in pubs and clubs. They are carried in the back pockets of jeans which are then subject to rather violent dancing on occasions, so there is damage.

Lord Redesdale: Is the Minister saying that the licensing authority would have to run a challenge scheme to get their licence? If that is the case, there would be a problem.

Lord Brett: As I explained in my opening statement, we are working with the industry to ensure that we have verification schemes in place that meet the aims with minimum additional cost to the industry by the time this comes into effect in October. We are anxious to ensure that we put in place what is already in place for the vast majority of people. Many parts of the industry have already introduced these schemes, hence the requirement to carry your passport or ID. The short answer to the noble Lord's question is no.
	Is it an offence to sell to under-18s if they do not have an ID? The offence at the present time is not the ID check but the selling of alcohol. The order will bring a requirement for the first time to check the ID. The noble Lord is also concerned about whether our response is disproportionate. We believe that it is not given the high level of public concern about alcohol-related crime and disorder-we heard some examples from the noble Lord himself. Some 26 per cent feel that drunken or rowdy behaviour is a particular problem in their local area. A key figure of 90 per cent of respondents to the public consultation supported a mandatory code of practice, which answers the question of whether what we are doing will bring confidence to the public. I believe that it will.
	The five minimum standards that we have set out are not disproportionate. We believe that the costs are reasonable and will not apply to many business premises. We cannot leave local authorities to do it all by encouraging them to review every licensed premises because there are 130,000 of them. This way, by bringing in mandatory requirements, we achieve that end with a much smaller cost to local authorities. We argue that local authority enforcers should be making the most of the powers available to them. That is why we have a large training programme in place to ensure that police and licensing authorities are fully aware of the powers they have and how they use them. We are running a series of two-day alcohol enforcement training seminars in our 50 priority areas aimed at magistrates, court officials, elected members who sit on licensing committees and operational police officers. This training will ensure that those in the front line are aware of the tools and powers available to them and are confident in using those powers.
	The noble Lord, Lord Skelmersdale, asked whether any lawyers outside the Home Office had seen the order. This went to the Joint Committee on Statutory Instruments, legal advice was given to that committee and the drafting was indeed amended to take account of and reflect those comments.
	The noble Baroness, Lady Hamwee, also raised the question of the national application of mandatory standards over the localism of the licensing act. It cannot be seriously argued that this order shifts the balance of the licensing act in favour of central government over local discretion. What we hope it does is give new powers to individual councillors in the Policing and Crime Act to allow them to act as interested parties so that they can call for a licensing review themselves. We also recognise that local discretion is the right way forward in most circumstances. There are two mandatory conditions, however, for a licensed premises which supplies alcohol. This is right because it is right for Government to send out minimum standards that they expect all retailers to adhere to. This is what we are doing in this order. That is why we think-

Baroness Hamwee: My Lords, my particular question was about the response from the local government world to the consultation.

Lord Brett: I was going to come to that. The Local Government Association did not in fact support these proposals. However, many local licensing authorities and local authorities did. Somewhere here I have a list of them as long as your arm-from Northumberland to Birmingham. My noble friend Lord Brooke of Alverthorpe cited Brighton and the very large number of licensing establishments in one form or another there. Brighton, however, is not typical, because it is a seaside resort. Brighton has an influx of visitors, both on a holiday basis and for the weekend or for just a day. You could apply the same criteria to Blackpool and a number of other seaside resorts that would not necessarily apply in smaller areas. He talks of the number of inhabitants per licensed premises. In my village, for example, there are 2,500 people and one licensed establishment-the pub-and no off-licence.
	What we are seeking to do is support that localism because the conditions will change very considerably over the country as a whole. That is presumably why we have a variety of supportive statements from everything from Kensington and Chelsea, Birmingham City Council, Sefton council, Runnymede, Northumbria, Cumbria, Bury-my second favourite football team-Sandwell and Newcastle-under-Lyme. In those terms, we are seeking to look at and ban the extreme ends of the promotions.
	The noble Baroness, Lady Hamwee, asked me if we were banning the yard of ale. The answer is that if the yard of ale is to be drunk in the time determined by the recipient or purchaser of it, that is one thing. If they are in a race to get it down their neck as quickly as possible, that we think is irresponsible.
	The other basic issue, of course, is that when we produce the guidance, it will be in plain English to make it very clear what will fall clearly on one side and clearly on the other side of what is deemed to be responsible. The guidance will be encouraging those who seek to make a promotion, whether it is a regular one or just a one-off, to first approach their local authorities if they have any doubts.
	As to the question about age verification in respect of mail order and online sales-like the wine clubs that some of us belong to-the answer is that it will make no difference there. There is a responsibility on the person who is selling the wine to verify that those who are seeking to buy it are over 18. That is normally done because they want you to pay by credit card. But there is no requirement at the present time on the person who delivers the wine. When it is delivered to your house, if your 14 year-old daughter or son signs for it, it will in no way be an issue.
	Another question related to the licence-holder of the premises and who has the responsibility for the age verification. We believe that that belongs to the person who is responsible for the licence of the premises. Clearly, they will be responsible for their staff, who could be part-time. They will know how to advise their staff, having determined their own policy in line with the order. I believe I have dealt with minimum pricing.
	I agree with the noble Baroness, Lady Finlay, that the order, with the new powers in the Policing and Crime Act, puts more power in the hands of local people. As I have said, local council members can call for reviews based on the concerns of local residents. On the question of minimum unit prices and cheap supermarket alcohol, I recognise some of those circumstances. That is why what seems to many people to be an esoteric issue is quite serious: people having alcohol poured into their mouths, usually, as the noble Lord, Lord Skelmersdale, says, when they are already inebriated. This can have serious effects on both their behaviour and their health.
	On the question of forms of ID, we have given a list of those that will need to have holograms. I recognise that there is an industry out there that is always able to produce a fake of something you want to be genuine. There is a limit to how far we can go but our approach is as firm as it can be.
	The noble Lord, Lord Redesdale, asked several questions, but I was rather disappointed in him today. I have been reading the Morning Advertiser and I know that he has had a survey done. He asked the readers of that august journal to support rejection of the order. I was interested to know what figures the noble Lord had but he did not give them.

Lord Redesdale: The responses showed that 63 per cent wanted the order shelved and 36.8 per cent wanted it kept. However, I was interested, on reading the responses, to see that a large number of health charities had taken part. There seemed to be a division between the publicans who responded and those who are involved in the health industry.

Lord Brett: I am not really surprised. I was rather disturbed that one of the questions said that local authorities and the police were opposed to the order when, in practice and at operational and national level, we can show that it is not true in the case of the police. It is also not true of local authorities and the public. There were several other questions, none of which, I think, would fundamentally change the debate. As I have said, the order has been scrutinised by the JCSI and the Merits Committee. We consulted and there was a 90 per cent response. We consulted twice, in 2008 and 2009.
	Finally, one word that I do not think can be applied to the order, although it has been applied by the noble Lord, Lord Redesdale, is "draconian". The order is not draconian; it is proportionate. There is, I am sure, room for improvement in the future. I am sure we will return to this when further evidence is available. This is a proportionate measure to bring some relief to communities that suffer from the misbehaviour and anti-social behaviour of people who induce themselves to get drunk as quickly as possible in circumstances where they are behaving irresponsibly. Those landlords and others who do not support the responsible drinking patterns that most of us have make up the minority. I pay tribute to the noble Lord, Lord Redesdale, for his leadership of organisations that seek to support responsible drinking patterns. On this occasion, the order is required and I trust your Lordships will support that view.
	Motion agreed.

Financial Services Bill
	 — 
	Committee (2nd Day) (Continued)

Amendment 25
	 Moved by Baroness Noakes
	25: Clause 3, page 3, line 14, at end insert-
	"( ) Where a matter has been omitted from either the annual report or the minutes published under section 2(4) and the action involves financial assistance as defined in section 257 of the Banking Act 2009, a report should be laid before Parliament when the conditions under subsection (3) no longer apply."

Baroness Noakes: My Lords, in moving Amendment 25, I will speak also to Amendment 28. Amendment 25 adds a new subsection to Clause 3. Amendment 28 adds a new clause after Clause 4. They both concern informing Parliament about financial support. Both focus on financial assistance.
	Noble Lords may know that the inspiration for the amendments came from the late disclosure of the emergency loans of £62 billion given to HBOS and RBS in October 2008 by the Bank of England. The Treasury indemnified the Bank as this was clearly way beyond the capacity of the Bank's own balance sheet. This was made public only when the Governor of the Bank of England revealed it during evidence to the Treasury Select Committee in another place in November last year. The Chancellor of the Exchequer was then forced to make a Statement to another place setting out the facts. It was revealed not only that these extraordinary loans were kept secret for over a year from shareholders and Parliament but also that the Chancellor had not even informed the chairman of the Public Accounts Committee or the Treasury Select Committee on a confidential basis. This brings me to my two amendments.
	Amendment 25 is concerned with the annual report and the minutes of the Council for Financial Stability. In any case of financial assistance, once the conditions of secrecy set out in Clause 3(5) and Clause 4(3) cease to exist, a report should be laid before Parliament. This report would obviously contain the information redacted from the minutes and the annual report.
	Amendment 28 concentrates on financial assistance to the Bank of England, which would be the normal route for such assistance. This lays on the Treasury the basic obligation to report to Parliament. That report should be made as soon as possible but may be delayed if there is a threat to financial stability. There is no need for a commercial confidentiality let-out here. Parliament must be told if taxpayers' money is being put at risk unless there is a reason at the national level to withhold such information. Importantly, the amendment provides that, if such a report is delayed, there is a positive obligation on the Chancellor to inform Members of Parliament on a confidential basis. It is for him to determine which Members of Parliament that should be. This is the area where the Chancellor badly let Parliament down in relation to RBS and HBOS last year. We must not allow that to happen again.
	These amendments overlap to some extent, but I hope that together they demonstrate the range of concerns that should be addressed in this Bill in response to the serious concerns arising from the non-disclosure of the RBS and HBOS arrangements. I beg to move.

Lord Myners: Amendment 25 explicitly concerns information about financial assistance as defined in Section 257 of the Banking Act 2009. The amendment would provide for information of this nature that was discussed in a Council for Financial Stability quarterly meeting but not minuted or covered by the annual report of the council to be made public in a report to Parliament when the confidentiality concerns in Clause 3(3) no longer apply.
	As I am sure the House is aware, there are already appropriate reporting mechanisms in place for financial assistance under the Banking Act 2009. It might be useful to set out these processes. First, under Section 228(6) of the Banking Act 2009, where funds for financial assistance are paid directly from the Consolidated Fund, the Treasury shall as soon as reasonably practicable lay a report before Parliament specifying the amount but not the identity of the institution to or in respect of which it is paid. This would normally take the form of a Written Ministerial Statement such as in the case of the £1.6 billion payment made under Section 228(5) in March 2009.
	Secondly, under Section 229(6), where a loan for financial assistance purposes is made from the National Loans Fund, the same reporting requirement as under Section 228(6) applies. No financial assistance loans have been made from the National Loans Fund to date.
	Finally, under Section 231, the Treasury is required to lay before Parliament a report about any arrangements which may involve or require reliance on Section 228(1). This will include financial assistance payments made from voted money or directly from the Consolidated Fund under the Banking Act. It will also cover guarantees and commitments entered into as financial assistance where the making of future payments could require reliance on the Banking Act. The report must not specify individual arrangements or identify, or enable the identification of, individual beneficiaries.
	These arrangements provide the right framework for reporting financial assistance under Section 257 of the Banking Act. There is no need, therefore, for further reports as part of the reports made by the Council for Financial Stability on its activity, especially as the council would not itself be taking any decisions about the giving of financial assistance.
	In terms of disclosure of financial assistance to the Bank of England, the Government are in discussion with the chairs of the Public Accounts Committee and Treasury Select Committee about how extremely sensitive information would be notified to Parliament in the unlikely event of additional confidentiality being needed in the future. As Sir Nicholas Macpherson, the Treasury's Permanent Secretary, indicated to the Public Accounts Committee when he appeared before it on 14 December:
	"The Chancellor and indeed the official Treasury are acutely aware of the importance of parliamentary accountability".
	We would work to establish an arrangement for exceptional cases, such as the assistance that the Treasury made available to provide emergency liquidity against security-not a giving of benefit, as suggested by the noble Baroness-to HBOS and the Royal Bank of Scotland.
	These arrangements are in addition to the normal processes for managing public money, which require the department to notify Parliament of statutory liabilities in the form expected by the legislation and any other major non-standard liabilities using a standard form of minute. These departmental minutes describe the amount and expected duration of the proposed liability; they explain which bodies are expected to benefit and why; and they explain how the authority for any expenditure required under the liability will be sought. As well as being laid in the House 14 sitting days prior to the liability being taken on, they are copied to the chairs of both the Public Accounts Committee of another place and departmental committees. In cases of particularly large or unusual liabilities, a ministerial Statement accompanies the minute. The Government are in discussion with the chairs of the Public Accounts Committee and the Treasury Committee to agree a process that will work effectively and ensure appropriate confidentiality. That will ensure that no action places at risk the very financial stability that we are seeking to achieve. Accordingly, I invite the noble Baroness to withdraw her amendment.

Baroness Noakes: My Lords, I thank the Minister for that response. He said that the Council for Financial Stability would not get involved in any such decisions and that Amendment 25 was therefore not necessary. We have pretty well established that the Council for Financial Stability does not have any real meaning, so perhaps Amendment 25 is not relevant.
	However, I am less clear about Amendment 28. We know that the Government did not inform Parliament about the HBOS and RBS arrangements until the Governor of the Bank of England had informed Parliament. That clearly did not work, and the fact that the Permanent Secretary at the Treasury is acutely aware of parliamentary accountability seems not to have achieved a result that many would have found satisfactory. I am not sure whether we can leave it to Ministers of the day, as advised by their Permanent Secretaries. I shall withdraw Amendment 25, but I give notice that, in a minute or so, I shall press Amendment 28 formally.
	Amendment 25 withdrawn.
	Clause 3, as amended, agreed.
	Clause 4 : Definitions
	Amendment 26 not moved.
	Clause 4 agreed.
	Amendment 27 not moved.
	Amendment 28
	 Moved by Baroness Noakes
	28: After Clause 4, insert the following new Clause-
	"Disclosure of financial assistance to the Bank of England
	(1) Where the Treasury provides financial assistance to the Bank of England in order to facilitate actions by the Bank of England in pursuit of its financial stability objective under section 2A of the Bank of England Act 1998, the Treasury shall lay a report setting out details of the financial assistance before Parliament.
	(2) A report under subsection (1) shall be laid as soon as possible after the provision of the financial assistance but may be delayed for as long as the Treasury considers that there would be a threat to the stability of the UK financial system if such a report were laid.
	(3) Where the laying of a report is delayed, the Chancellor of the Exchequer shall ensure that information is given on a confidential basis to those Members of Parliament whom he considers should be informed.
	(4) "Financial assistance" includes giving guarantees or indemnities and any other kind of financial assistance (actual or contingent)."
	Amendment 28 agreed.
	Amendment 29
	 Moved by Baroness Noakes
	29: After Clause 4, insert the following new Clause-
	"Bank of England's financial stability objective
	After subsection (1) of section 2A of the Bank of England Act 1998, insert-
	"(1A) In considering that objective, the Bank must have regard to-
	(a) the economic and fiscal consequences for the United Kingdom of instability of the UK financial system;
	(b) the effects (if any) on the growth of the economy of the United Kingdom of anything done for the purpose of meeting that objective; and
	(c) the impact (if any) on the stability of the UK financial system of events or circumstances outside the United Kingdom (as well as in the United Kingdom).""

Baroness Noakes: Well, my Lords, I am at a loss for words. As noble Lords will be aware, that does not very often happen. I shall move Amendment 29 and speak to Amendment 32. Both of these amendments concern the differences between the financial stability objective for the Bank of England, which was created in last year's Banking Act, and that for the FSA which is created in Clause 5. The Bank of England's financial stability objective is set out in Section 2A of the Bank of England Act 1998, which says that the objective is,
	"to contribute to protecting and enhancing the stability of the financial systems",
	in the UK. We had several discussions during the passage of the Banking Act last year about whether a more precise definition should be given, but the Government refused to budge on that.
	When we come to this Bill, the FSA's new financial stability objective in the proposed new Section 3A(1) of FiSMA is phrased in much the same way as it is for the Bank, but new Section 3A(2) goes on to say that the FSA has to "have regard to" some very sensible things; namely:
	"the economic and fiscal consequences for the United Kingdom of instability",
	in,
	"the UK financial system; ... the effects ... on the growth of the economy of",
	the UK and,
	"the impact ... on the stability of the UK financial system of events or circumstances outside",
	the UK. My Amendment 29 simply adds those sensible things to which the FSA should have regard to the financial stability objective for the Bank of England. I cannot think that the Government would want the two bodies to be working to substantially different terms of reference for financial stability, so I am sure that the Minister will agree with my amendment.
	The second amendment in this group, Amendment 32, adds a new clause after Clause 4. It also probes a difference between the wording used for financial stability in last year's Banking Act and in this Bill. Last year, the wording referred to the financial systems of the UK, while this year the parliamentary draughtsman has used, "UK financial system"; that is, last year, there was more than one system, and this year there is one. If the courts ever come to interpret this Bill and last year's Act, there would be a prima facie case that the Government intended different things, since they have used different language. The normal interpretation from that is that the difference was deliberate. Amendment 32 says:
	"For the avoidance of doubt",
	the financial systems wording means the same as this year's wording. I beg to move.

Lord Myners: Amendment 29 would give the Bank of England a list of factors to which it must have regard when considering its financial stability objective. These three factors are identical to those set out for the Financial Services Authority by Clause 5. They are the economic and financial consequences of instability for the UK, any effects on economic growth of the FSA's stability-enhancing measures and any impacts of overseas events or circumstances on UK financial stability. I understand why the noble Baroness might think that it is sensible for the FSA and the Bank of England to have their financial stability objectives framed in precisely the same way. However, I will explain why this is neither necessary nor appropriate.
	The amendments to the Financial Services and Markets Act proposed by the Bill follow the existing style of that Act. As noble Lords are aware FiSMA sets out a detailed legislative framework by which the FSA must operate. Section 2(3) of the Act lists a number of matters to which the FSA must have regard. The list of factors to which it must have regard when pursuing its financial stability objectives have been drafted to be consistent with this approach. FiSMA currently focuses on providers and consumers of financial services and does not mention taxpayers or the wider economy. The style of FiSMA offers no flexibility on the FSA's objectives and "have regard to". The list inserted by new Section 3A(3) in Clause 5 requires the FSA to consider these wider factors when undertaking its detailed statutory functions and operations.
	The Bank, on the other hand, is generally not constrained in the same way. Although the Bank of England Act 1998 goes into some detail it is not the case that all the Bank's operations are set out in detailed statute. For that reason, the Government do not believe that it is appropriate to give the Bank the same parameters as the FSA for its financial stability objective. The Bank and the FSA have different roles and different tools. Until the financial crisis, the FSA was focused on micro-level regulation. We are now giving it a wider set of factors to consider, but the Bank has always had a wider macroeconomic approach. I agree that it should consider the factors set out in the new clause to the extent it judges appropriate, but it can already do so. In contrast, it is an extension of scope for the FSA to be asked to look beyond the narrowly defined financial services sector. I hope that I have explained why the proposed new clause is not necessary and urge the noble Baroness to withdraw her amendment.
	I now turn to Amendment 32, which would include specific provision such that where the Bill refers to "the UK financial system", it means the same as,
	"the financial systems of the United Kingdom",
	as in the Banking Act 2009. That expression is not defined in the Banking Act but is used in a number of places, mainly in Part 1 in relation to the special resolution regime. Under normal principles of statutory interpretation as set out in the Interpretation Act, words in the singular include plural and vice versa unless the contrary intention appears. Accordingly, we do not consider that there is any need to include a provision in the Bill along the lines of the amendment that has been tabled. I therefore ask the noble Baroness not to press it.

Lord Howard of Rising: Many people have voiced their differences on the tripartite government system, and we are all concerned with that. Are not the Government building into this system further potential problems by having different definitions? The Minister explained it by describing what was required of the FSA but I cannot see that by putting in the definition of what the Bank of England has to look at in any way binds or changes what the FSA has to look at. Perhaps the Minister can explain that. He explained it via the FSA but the amendment has to do with the Bank of England.

Lord Myners: I thank the noble Lord, Lord Howard of Rising, for his contribution. However, I have already addressed his point. I made it very clear that the Bank of England already has very wide powers to take into consideration macro factors and does not need these to be further memorialised in statute. The Bank of England has made no request to us when we were drafting the Bill that that should be considered.

Baroness Noakes: I am a bit mystified. Which sections of any of the Bank of England Acts contain these macroeconomic factors that they have regard to? I cannot remember which sections he is referring to.

Lord Myners: I did not say that I was referring to the Act. I said that they already take into consideration a wide range of macro factors.

Baroness Noakes: I am mystified by this. The Bank of England Act is not specific on this. The only broader references might be in relation to the specification of the Monetary Policy Committee's objective in the 1998 Act. However, I do not think that the 1948 Act-if that is the right year-the 1998 Act or last year's Banking Act specified these broader aspects. We continually refine what the Bank of England is supposed to do. Surely it is right to use best practice from other parts. We have the FSA with the financial stability objective expressed in different ways from the Bank of England. Are they not supposed to be achieving the same thing? Are they achieving different things? The Minister has not explained why they should be expressed differently.

Lord Myners: I can only go over the ground that I have already covered. No one is suggesting that there are any weaknesses at the moment in the authorities and powers of the Bank of England or its approach to the management of the stability of the financial system. The Treasury has come across no situations in which it believes that the Bank might be inhibited or restricted by statute from performing the function which we would look to the Bank of England to carry out, nor has the Bank of England in the representations that it has made to us in connection with the Bill cited this as an area where it would suggest that it would be appropriate to mirror the wording which is used for the FSA.

Baroness Noakes: Well, My Lords, I am sorry about this. The creation of tripartite authorities gets messier and messier. As the Government try to tidy one bit up-the FSA-we get other bits of untidiness. We cannot allow this to continue. I would like to test the opinion of the House.

Division on Amendment 29.
	Contents 27; Not-Contents 48.
	Amendment 29 disagreed.

Amendments 30 to 32 not moved.
	Clause 5 : Financial stability objective
	Amendment 33
	 Moved by Baroness Noakes
	33: Clause 5, page 4, line 8, at end insert-
	"( ) proceedings of the Council for Financial Stability as set out in section 2 of the Financial Services Act 2010"

Baroness Noakes: My Lords, I thought that the Committee might like to move on to Clause 5. Amendment 33 is the first of a small series of amendments which will tease out the relationships between the Bank, the FSA and the Council for Financial Stability.
	When we looked at amendments to the earlier clauses we were looking at the interrelationships from the perspective of the council, which is where they come together. I now seek to probe the interrelationships when seen from the other end of the telescope, namely from the perspective of the FSA or the Bank.
	Clause 5 amends the Financial Services and Markets Act 2000 and sets out a new objective for the FSA to contribute to financial stability. Clause 5(3) expands on the financial stability objective, and sets out in subsection (2) of new Section 3A of FSMA various things to which the FSA must have regard. My amendment adds to that list and says that in considering the financial stability objective, the FSA must have regard to the proceedings of the Council for Financial Stability.
	In another place, the Minister said that the amendment was unnecessary and that nothing was to be gained by it. He said:
	"The FSA will clearly take account of the discussions in the council when considering how best to meet its objective of contributing to financial stability".-[Official Report, Commons, 25/1/10; col. 632.]
	This is a traditional ministerial defence of government drafting. First you say that it is unnecessary and then say that it will happen anyway. Some of us have become cynical about this defence. The noble Lord, Lord Myners, used it last year in connection with the Banking Bill debates, when he resisted the substance of what is in this clause. Last year he said that the FSA did not need a financial stability objective because it was already implicit in its market confidence objective. He said that a financial stability objective was not appropriate. If something is not in plain language in the Bill, we cannot assume that it will be taken for granted. The Minister cannot give a Dispatch Box assurance about what the FSA will or will not do, and so we have to judge the Bill for what it says, not what the Minister would like it to mean. I beg to move.

Lord Myners: Amendment 33 would require the FSA to have regard to the proceedings of the Council for Financial Stability when considering its financial stability objective. I can agree with the spirit of the amendment but I do not believe that it is necessary. The Government are creating the Council for Financial Stability precisely to be a forum for effective co-ordination between the authorities responsible for financial stability. Clause 1(3) is clear that the council has to monitor and co-ordinate, and paragraph 17 of the terms of reference clearly specifies that the council will consider the financial stability strategies of the FSA and the Bank.
	I am confident that the FSA, like the Bank, will work in close partnership with the other authorities in the work of the council. For this reason, we fully expect the FSA to take due account of the council's discussions and that the actions of all the authorities will be informed by the views, actions and approach of other council members.
	In addition, paragraph 26 of Schedule 2 to the Bill amends Section 354 of FSMA, which concerns the FSA's duty of co-operation. Paragraph 26 will extend this duty by adding a new subsection which states:
	"In pursuing its financial stability objective, the Authority must take such steps as it considers appropriate to co-operate with other relevant bodies (including the Treasury and the Bank of England)".
	Therefore, nothing would be gained by adding the proceedings of the council to the list of matters to which the FSA must have regard. I therefore invite the noble Baroness to withdraw her amendment.

Baroness Noakes: Could the Minister direct me again to the reference in Schedule 2?

Lord Myners: I referred the noble Baroness to paragraph 26 of Schedule 2 to the Bill.

Baroness Noakes: My Lords, clearly paragraph 26 will repay most careful study, which I undertake to do before returning to this part of the Bill. I beg leave to withdraw the amendment.
	Amendment 33 withdrawn.
	Amendment 34
	 Moved by Baroness Noakes
	34: Clause 5, page 4, line 9, after "Treasury" insert "and the Bank of England"

Baroness Noakes: I shall speak also to Amendment 105. Under new Section 3A(3) of FSMA, which is inserted by Clause 5(3), the FSA is to determine and review its strategy in relation to its financial stability objective and must consult the Treasury. When the Bank of England was given its financial stability objective in last year's Act, an identical clause was set up, with the Bank consulting the Treasury on its financial stability strategy. It is clearly right that each body should develop its own strategy because each has its own responsibilities and powers. My amendments do not call for a common strategy but for the FSA and the Bank to consult more widely than the Treasury. If there is to be any meaning to tripartite working, it seems odd that each one must consult the Treasury but not each other.
	Amendment 34 calls for the FSA to consult the Bank of England on its strategy, and Amendment 105 returns the compliment by making the Bank consult the FSA on its strategy. The draft terms of reference for the Council for Financial Stability has a go at this area. It says that the council,
	"in considering strategic developments ... will consider the statutory financial stability strategies of the Bank and the FSA-the Council will act as a forum for challenge and co-ordination of these strategies but determination of individual strategies will be a matter for each independent Authority".
	So we have the Bank and the FSA working on their own strategies and consulting the Treasury, and then those strategies are put before the Council for Financial Stability, which might challenge them or even co-ordinate them. Will the Minister explain what happens if there is a challenge? Two of the three council members have already been involved in the preparation of the strategy. At a council meeting, presumably it is only the third member who will challenge because it is only his organisation that has been excluded from the preparation process.
	Will the Minister explain what the co-ordination of the strategies is about? If the FSA and the Bank have individually prepared their strategies in divergent ways, what is co-ordination about? Is this code for sending one or both of the FSA and the Bank back to the drawing board? All this is very mysterious. No further light was shed on Report in another place when, in response to the equivalent amendment, the Minister said:
	"In our view, it is unnecessary"-
	that useful ministerial concept again.
	"The draft terms of reference for the council for financial stability already specifically require it to consider the financial stability strategies of the Bank of England and the FSA".-[Official Report, Commons, 25/1/10; cols. 631-2.]
	My amendments are not about ex post consideration but about involvement ex ante in the development of strategies. As the Committee will be aware, our policy would eliminate the gap between the FSA and the Bank of England in relation to financial stability. In our world one body would produce a holistic strategy for financial stability and would, of course, consult the Treasury. In the fragmented world of the Government's creation, the Bill misses opportunities to close the gaps between the tripartite bodies. I do not believe that this is a sensible way to proceed even within the Government's own construct of the tripartite authorities and financial stability. I beg to move.

Lord Higgins: My Lords, we seem to be getting in a position where everyone is looking for stability in the financial system and everyone is consulting everyone, except for some reason at this point the FSA consults only the Treasury and not the Bank of England. However, the real trouble with this arrangement is that one really does not know where the buck stops at the end of the day. It is dividing all over the place, everyone is consulting with everyone, but no one appears ultimately responsible. Which of the three is it?

Lord Hodgson of Astley Abbotts: My Lords, I cannot see how the Government can reasonably resist this amendment. Either we will have a position where the Treasury is calling the shots all the time or we will have a tripartite co-ordinating structure, which I think is the Minister's plan. He keeps telling us that the council has no Executive responsibility and is a co-ordinating body. The authority does not have to consult the other two members; only one of the other two members is consulted. Surely the very essence of the co-ordination that the Minister has in mind should require all three parties to dance at the same time.

Lord Howard of Rising: My Lords, when the Minister answers, it would be helpful if he could tell us where the buck stops, as my noble friend Lord Higgins has asked. One of the weaknesses of the tripartite system is that there is no buck-stopper around. The Minister should look very seriously at this amendment. Anything that welds the tripartite authority together to make it a more unified structure whereby each part supports the others rather than argues with them is to be applauded.

Lord Myners: My Lords, Clause 5 requires the FSA to prepare a financial stability strategy and, in doing so, to consult the Treasury. Amendment 34 would require the FSA also to consult the Bank of England in this work.
	The amendment is not needed, because the effect that the noble Baroness seeks is already provided for in the terms of reference of the Council for Financial Stability. The draft terms require the council to consider the financial stability strategies of the Bank and the FSA. Therefore, the Bank will have a consultative role.
	Nevertheless, it is right that the FSA should be required by the Bill to consult the Treasury. As the UK's finance and economics ministry, it is ultimately accountable to Parliament and responsible for decisions that have an impact on public finances. I hope that this provides sufficient reassurance to the noble Baroness that her amendment is not needed, and I invite her to withdraw it.
	Amendment 105 seeks to amend Section 2A(3) of the Bank of England Act 1998, which provides that the Bank's strategy in relation to financial stability shall be determined and reviewed by the Court of Directors of the Bank of England. Currently, the court must consult the Treasury before it sets the strategy. The new clause proposed by the amendment would require the Bank also to consult the FSA in addition to the Treasury when setting the Bank's strategy. I reassure noble Lords that this amendment is also unnecessary. The role of the Council for Financial Stability is to act as a forum for discussion and co-ordination of the Bank's and the FSA's financial stability strategies. As noble Lords are aware, the FSA is one of the council's three members and will therefore take an active role in scrutinising the Bank's strategy for financial stability. However, again, it is right that the Bank is required by Section 2A(3) of the Bank of England Act to consult the Treasury, since the Treasury is ultimately accountable to Parliament and responsible for decisions that may have fiscal consequences.
	Noble Lords have asked who does the challenging when two parties have already agreed, but I think that it is obvious: it could be one of the two parties to which the noble Baroness referred, having not reached agreement with the other party, or it could be the third party. That is precisely why the Council for Financial Stability is meticulous in its requirement not only that the minutes be published but that attributable comments be included in them as agreed by the three members of the council. That will be the test in teasing out any difference of opinion that might arise.
	The noble Lords, Lord Higgins and Lord Howard of Rising, again asked who is in charge or who is responsible. We covered this at some considerable length at both Second Reading and on the first day of Committee. I could again repeat the answers that I gave then: the FSA is the independent financial services regulator responsible for the supervision of financial firms. The Bank of England is the central bank; it is responsible for providing liquidity insurance to the banking system; it has oversight of the payments system; and it is the resolution authority. Finally, the Treasury, as the finance and economics ministry, is responsible for the overall institutional structure of financial regulation and the legislation which governs it. It is ultimately accountable to Parliament and responsible for decisions which impact on the public finances. That could not be clearer. There is no doubt who is responsible for what, and there is no doubt in my mind that the Council for Financial Stability will significantly improve transparency and accountability from its predecessor and therefore represents a good improvement on a model that already worked very well during the crisis.

Baroness Noakes: My Lords, I cannot leave unchallenged that this model worked very well in a crisis. We all know that this model failed abjectly the first time it was put to the test, which is why this Bill tries to pretend that the arrangements that used to work just need a little bit of tweaking and improving to make them work even better. We know that is not the case.
	The concept that the Minister is really putting forward is that financial stability is not one thing where everybody is working together. The FSA does a little bit working on its own and perhaps with the Treasury. The Bank does its bit perhaps working with the Treasury. The Treasury does whatever the Treasury does and then they come together in this shiny new concept called the Council for Financial Stability and somehow this all works.
	I think the Minister does not really believe that this will all work. This is really all rather silly. I am getting bored with the Council for Financial Stability. All the Minister has said has not endeared the Council for Financial Stability to my party. I do not think that we are any more impressed with it at the end of these amendments than we were at the beginning of day one of Committee. However, I think it is time to move on from the Council for Financial Stability. I beg leave to withdraw the amendment.
	Amendment 34 withdrawn.
	Amendment 35 not moved.
	Amendment 35A
	 Moved by Baroness Noakes
	35A: Clause 5, page 4, line 10, at end insert-
	"( ) The FSA must issue a statement of policy about-
	( ) its understanding of the objective, and
	( ) in what circumstances and how it intends to use its powers to achieve the objective.
	( ) Before issuing the statement of policy, the FSA must consult-
	( ) the Treasury,
	( ) the Bank of England, and
	( ) such other persons as it considers will or may be affected by the statement."

Baroness Noakes: My Lords, Amendment 35A adds two new subsections to proposed new Section 3A of FSMA as inserted by Clause 5(3). The financial stability objective is not defined in this Bill, as it was not when the Bank of England was given its financial stability objective in last year's Banking Act. We sought then to get a definition in the statute or, failing that, a requirement to define what is meant by "financial stability" in the code of practice. As I recall, more than one definition had surfaced during the consideration of that Act and we thought that clarity would be aided by a definition. We did not succeed in that.
	However, we now have a financial stability objective proposed for the FSA and rather different considerations apply. The FSA will be able to use some of its powers solely on the basis of it being desirable for its financial stability objective. Under Clause 7, the FSA's powers are proposed to be considerably enhanced. For example, its own-initiative power in Section 45 of FSMA could, if Clause 7 is passed into law, be used by the FSA if it is desirable in order to meet any of its regulatory objectives. At present, the FSA can use this power only in relation to consumer protection. Similarly, the general rule-making power in Section 138 of FSMA is extended from consumer protection to all of the FSA's objectives by Clause 7.
	These are massively widened powers and we will debate them when we get to Clause 7. For the purposes of Clause 5, the relevance is that the FSA has an undefined financial stability objective which it can now invoke to justify the use of various of its powers. I hope that the Government share our belief in regulatory powers needing to be clear in order to give certainty to the regulated community. Clause 5, taken with Clause 7, creates major new uncertainty.
	The Banking Act creates a requirement for the Treasury to issue a code of practice setting out how the special resolution powers would be used. This was welcomed by the financial services sector even if the content did not always satisfy those who looked to the code for answers. I believe that this Bill would be improved by something similar.
	Amendment 35A calls for the FSA to issue a statement of policy of both its understanding of the objective and in what circumstances it intends to use its powers to achieve its objective. It also requires the FSA to consult the Treasury, the Bank of England, and people who could be affected by the statement. It would clearly not bind the FSA in all circumstances, but it would give reassurance to the financial services bodies that might be affected by what is meant by it.
	The amendment was prompted by the memorandum submitted by the City of London Law Society to the Public Bill Committee in another place. It is concerned about the breadth of the rule-making powers and the lack of constraints on the use of those powers. In relation to Clause 5, it believes that a statement of policy is the very least of the amendments that should be made to give greater clarity about the objective. The City of London Law Society said that it understood that the Government's main concern was to ensure that the FSA took account of the systemic risk posed by common patterns of behaviour by, and relationships between, regulated firms. I do not know if that is what is intended to be covered; I suspect that there are other things as well-but whatever that is, the FSA ought to be clear about it. I hope that the Minister will share that desire for clarity. I beg to move.

Lord Hodgson of Astley Abbotts: My Lords, other noble Lords may have seen the briefing from the British Bankers' Association that deals with the point made by my noble friend and the issue that her amendment seeks to address. The association says, inter alia, that the provision of a financial stability objective should not be taken as a licence for the FSA to place unreasonable information demands on banks and that there will be a need for full and open dialogue on what further data capture and reporting requirements this may involve. It says that the provision should not be taken as a licence for the FSA to act other than on the basis of proportionate action, based on established need, and a full understanding of the consequences of its action.
	This is clearly an issue that concerns the British Bankers' Association a great deal. The amendment that my noble friend moved would go a long way towards ensuring that these concerns are addressed because of the way which she requires the FSA to plan and prepare and to explain why it will act in a proportionate way.

Lord Myners: Amendment 35A would require the FSA to issue a statement about its understanding of its financial stability objective and how it plans to use its power to achieve this. It would also require the FSA to consult the Treasury, the Bank of England and any other person whom it considers will be affected by the statement. While I agree with the sentiment of this amendment, I must argue that it is superfluous, because it is already covered elsewhere. I begin by referring the noble Baroness to new Section 3A(3) in Clause 5, which states:
	"The Authority must, consulting the Treasury, determine and review its strategy in relation to the financial stability objective".
	The section may not refer specifically to a statement of policy, but this is just a matter of wording. The content is clearly there.
	As for the FSA consulting the Bank on its strategy for financial stability, I assure the noble Baroness that provisions for this are already in place. As noble Lords are aware, the Bank of England is a member of the Council for Financial Stability. The terms of reference for the council clearly specify that it will consider the financial stability strategies of the FSA and the Bank. Ipso facto, the Bank will have a role in scrutinising the financial stability strategy of the FSA, which already takes a proactive approach to consulting industry and consumers on its policies. I have no reason to doubt that this will be any different where the FSA's financial stability strategy is concerned. When the FSA makes rules, it is required to consult in accordance with Section 155 of the Financial Services and Markets Act. When making rules under Section 138, the FSA will still have to follow the procedures in Section 155, including consulting industry and other stakeholders and undertaking a cost-benefit analysis. It will also have regard to its general duties in respect of the desirability of maintaining the UK's competitive position and the need to be proportionate in its regulation. I hope I have clearly explained why this amendment adds nothing to the Bill, and I therefore urge the House to resist it.

Lord Higgins: I have had some difficulty because the noble Lord is reading out the answer to the questions raised by my noble friend behind me rather than making it up in his own words-it is always much easier to understand when he does not simply read it out.
	I have some difficulty in seeing from the Bill as it stands where the FSA will not be in danger of demanding too much information from banks-although if it had demanded rather more in the past it would probably be to our general advantage. In particular, I am not clear about how duplication is to be avoided. If information is to be demanded from the banks, is it to be done by the FSA or the Bank, and how are they going to arrange this? Which will be the lead person in demanding information, and then, presumably, in ensuring that it is enough for both the Bank and the FSA? At the moment it is not at all clear from the Bill why any burden is placed on the FSA not to demand excessive information on the one hand, or to ensure that there is not duplication between the Bank and the FSA on the other.

Lord Myners: I thank the noble Lord, Lord Higgins, for his intervention. My experience is that when I make up the answer as opposed to reading it I invariably get myself into difficulty. Common sense tells me that on the whole I should stick to developing my skills in reading aloud rather than in trying to convey to the House my understanding of why we are making particular proposals and how I think they will operate. It is precisely because of my tendency to extemporise that I found myself challenged earlier by the noble Lord, Lord Lawson of Blaby, as to whether I had misled the House on issues in Canada. Having used the dinnertime break to check the facts assiduously, I am increasingly confident that I did not mislead the House, although I still have to do a little further work in answering that point.
	This takes me back to the more substantial point made by the noble Lord, Lord Higgins: the question of what limits the FSA from making unreasonable requests. The FSA is required to have regard to costs and proportionality in the inquiries and requests that it makes for information. I agree with the noble Lord that the balance of argument is strongly in favour of the fact that in recent years the FSA should have been asking more questions. I would even go a little further and say that it should have been asking more questions about business strategy and managerial competence rather than simply gathering data. However, both in the Turner review and in its forensic analysis of the failure of Northern Rock, the FSA itself admits that it needs to change its style of engagement. The question of whether it asks for too much information has to be addressed through processes of open consultation.
	On the matter of who asks the banks for information, the noble Lord asks a very good question. Our view is that regulatory institutions should not be bombarded with requests for information from the Treasury, the Bank of England and the FSA in connection with financial stability. That is why we require that those questions are channelled through the Financial Services Authority. If the Bank requires additional information, it will seek it through the FSA.

Lord Northbrook: One of the troubles with new Section 3A(2), to be inserted by Clause 5, is that it states:
	"In considering that objective the Authority must have regard to",
	three broad categories. However, it does not focus, as the amendment does, on what is important, which is the FSA's understanding of the objective and how it will be achieved. That is why I support my noble friend's amendment.

Lord Higgins: The noble Lord's answer was very helpful in its context, but are we to understand that the Bank of England will not approach banks at all to ask for information but will always ask the FSA to get it and then pass it on?

Lord Myners: With the agreement of the noble Lord, Lord Northbrook, I will first answer the question asked by the noble Lord, Lord Higgins, which followed on from his earlier one. Of course, there is a lot of contact between the Bank of England and the banking community, particularly through Mr Paul Tucker, the deputy governor, and Mr Paul Fisher, another executive director of the Bank. I doubt whether there is a day when they do not meet people from the banking industry. But we are talking about the collection of data from banks. That data collection will go through the FSA because the first stage must be for the Bank of England to seek an understanding from the FSA where it already has the data or has data that will provide the answer to the question that the Bank is seeking to address. If that is not the case, that information request will be channelled through the FSA, which has formal links for the purposes of information gathering with all regulated and supervised banks in the United Kingdom.
	On the point made by the noble Lord, Lord Northbrook, the three categories described are very broad, but that is consistent with our principle-based approach. If we are too specific, there is a danger that we limit ourselves and then find that new circumstances emerge that are not precisely contemplated in legislation. The language that focuses on principles and broad areas of authority without being too narrow or specific is consistent with the approach that we are seeking to adopt and will be supportive of the intention of the Bill.

Baroness Noakes: I thank my noble friends Lord Northbrook, Lord Higgins and Lord Hodgson for their passionate observations. My noble friend Lord Higgins hit the nail on the head in relation to information, because it emerged in evidence sessions for the Public Bill Committee in another place that information powers are one of the few things that the Bank wanted but which are not in the Bill. We have an amendment somewhere in the 300s that will address that.

Lord Myners: I was helpfully trying to point out that the direction of the question asked by the noble Lord, Lord Higgins, as the noble Baroness might have noted, might not be entirely consistent with an amendment that we may reach in the late autumn if we proceed at this pace with the Committee stage of the Bill.

Baroness Noakes: That is entirely correct and my noble friend Lord Higgins would have come to appreciate the importance of information powers for the Bank before we got to that stage.
	It is perfectly clear that written right at the top of the Minister's brief is "resist", that word that appears on most ministerial briefs. One could tell that the Minister's heart was not quite in it. He told me that my amendment was superfluous because somehow a strategy was the same as a statement of policy. Since the City of London Law Society, which I respect greatly, has seen the Bill, which talked about a strategy, and still said that we needed a statement of policy, I rather took that as being important. There is no requirement here to issue or publish a strategy. There is no sign that it is the same thing. There is no consultation on the strategy beyond the Treasury, whereas my amendment would require wide consultation and in particular refers to other persons who,
	"may be affected by the statement",
	of policy. The Minister is resisting something which is entirely sensible for the regulated community. There is an inability to see the kind of concerns that genuinely exist out there. If the FSA just had this objective without widening the powers to cover this, it might have been an easier matter. It is not an easy matter because the powers are to be broadened at the same time. For that reason, I would like to test the opinion of the House.

Division on Amendment 35A
	Contents 22; Not-Contents 41.
	Amendment 35A disagreed.

House resumed.
	House adjourned at 9.55 pm.